In Latvia, a significant portion of mortgages are tied to the Euribor rate, and recent declines in this benchmark are bringing relief to borrowers. According to data from Latvijas Banka, as of the end of March, a substantial 94,200 out of 105,400 mortgage loans were linked to the Euribor rate.
The six-month Euribor, which significantly impacts many Latvian mortgages, has fallen to 2.069% by the end of May, a level last seen in October 2022. The three-month Euribor also dropped below 2% in late May. This decrease follows a period of rising rates, which peaked in late 2023.
As a result, mortgage payments are decreasing. For example, a mortgage with a remaining balance of 46,000 euros and a 15-year term, with a rate of 2% plus the six-month Euribor, would see monthly payments decrease as Euribor falls. This trend is expected to continue, potentially stimulating the housing market.