Lending in Latvia remains slow, with high interest rates compared to the Eurozone, particularly in the housing and corporate sectors, according to the Bank of Latvia, LETA reports. While home loan interest rates have decreased slightly since 2018, they are still two percentage points higher than the Eurozone average, partly due to the dominance of variable rates. Structural challenges, such as strict collateral requirements and high refinancing costs, further hinder borrowing, especially outside of Riga. Non-bank lenders have grown in popularity, despite their higher costs. The central bank suggests reforms to improve loan accessibility, including encouraging fixed-rate loans, reducing refinancing costs, and eliminating early repayment fees.
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