On Apr. 7, 2025, LTH CB commented on how recent amendments to the refinancing of simplified housing loans have prompted residents to actively seek better loan terms.
Also, people are not only renegotiating existing loans but also increasingly borrowing for housing purchases and consumer needs, while the volume and number of new loans are declining, corporate loan portfolios are expanding at an accelerating pace.
In contrast, time deposits are losing appeal as interest rates continue to fall.
On Jul. 19, LTH MoF launched consultation on refinancing draft rules.
LTH MoF said mortgage refinancing should be convenient for people: simple, fast, free.
Follows LTH CB May 2024 confirmed aim to make refinancing less expensive #211519.
Overview
LTH MoF together with LTH CB submits housing loan refinancing draft to consultation.
Its essence is that the process must be much simpler, faster and, unlike now, it must not impose additional costs on consumers.
Minister noted GVT wants to encourage competition between home loan providers.
So loan refinancing process must become fast, simple and free as, for most people, a home loan is longest financial commitment of their life, can be as long as 30 years.
Ability to periodically evaluate, choose most optimal loan servicing conditions needed.
Amendments to the law that will ensure this have already been prepared, are being coordinated with the public and will be presented to Seimas in the autumn session.
Key Aspects
Currently, refinancing process is unattractive for credit holders as have to go to both bank and new financier several times; new appraisal must be submitted to new bank.
Must obtain certificate of loan balance from existing bank; signing new contract usually requiring contract early repayment fee as high as few percent of repayment amount.
It is estimated that administrative fees related to refinancing alone can reach EUR +1,000 when refinancing EUR 100,000 mortgage.
The draft law on credit related to real estate envisages it will be enough for people to apply to new credit provider, it will carry out most of the refinancing procedures.
Consumers would no longer experience any costs related to refinancing and competition between banks for existing and new borrowers would increase.
It is estimated that eliminating mortgage refinancing costs and simplifying refinancing process could save consumers up to EUR 500 million in long term, pay less interest.
The amount saved could be used for consumption or investment; further details.
The draft law will have to be approved by the Government and the Seimas (LTH PRL).
Draft resolution approving bill amending Real Estate Credit Law XII-2769 arts 3, 14, 37 and 58 and supplementing it with Chapter IV and bill on amendment of arts 3, 6, 14, 16, 22 of Law XIV-2580 aimed to submit them to Seimas; memorandum issued, too.
Effectiveness
The consultation runs from Jul. 19 to Aug. 8, 2024 and is referred to as tunning.
Sep. 2024 Project Approval
On Sep. 11, 2024, LTH MoF announced the approval of the project for the refinancing of housing loans, prepared by the LTH MoF with the LTH CB, which will allow people to find the best source of the loan much easier, faster and without additional costs.
Proposed amendments will significantly improve the conditions for financing people's housing and will be presented at the beginning of the autumn session of LTH PRL.
Proposed legal regulation of simplified refinancing will have a positive impact on both the people and economic situation in Lithuania; law to take effect from May 1, 2025.
In Sep. 2024, LTH PRL registered bill amending real estate credit law, see #226156.
Apr. 2025 LTH CB Comments
On Apr. 7, 2025, LTH CB commented on how recent amendments to the refinancing of simplified housing loans have prompted residents to actively seek better loan terms.
Also, people are not only renegotiating existing loans but also increasingly borrowing for housing purchases and consumer needs, while the volume and number of new loans are declining, corporate loan portfolios are expanding at an accelerating pace.
In contrast, time deposits are losing appeal as interest rates continue to fall.
Regulators
LTH CB; LTH MoF
Entity Types
Bank; CNSM; MG Orig; Servicer
Reference
PR, 4/7/2025; PR, 9/11/2024; Bill 24-12169, 24-12171, 24-12173, CP, PR, 7/19/2024; Law XIV-2580; Law XII-2769
