„Realco“ sales director Marijonas Chmieliauskas agrees that, as residents’ ability to purchase housing decreases, the decision to ease requirements is welcome.
„In July, the average price of a newly built apartment in the capital was about 4,200 euros per square meter, so a 50 sq. m apartment cost approximately 211,200 euros. With a 15% down payment, about 31,700 euros would need to be saved, and with it reduced to 10% – about 21,100 euros. This is still quite a large amount, but it is about a third less,“ calculates M. Chmieliauskas.
However, he points out that housing is becoming more expensive. A year ago, the price per square meter of newly built housing in Vilnius was on average 3,900 euros, so the price of the same 50 sq. m apartment would have been about 194,600 euros – 16,600 euros less than now.
„Housing demand is supported by the growing national economy, residents’ incomes, and the portion of funds withdrawn from the second pension pillar directed to real estate. Housing prices are also influenced by rising construction costs – more expensive materials, transport, and labor. Additional pressure is caused by geopolitical tension and the resulting energy price fluctuations. In June, inflation in Lithuania was 5.4% and was the second highest in the European Union (EU),“ lists the „Realco“ sales director.
Why might a smaller down payment not be enough?
According to M. Chmieliauskas, a smaller initial down payment may slightly ease the purchase of housing, but it is unlikely to have a significant impact on real estate market activity. As housing prices rise, the benefit of a reduced down payment diminishes – soon a 10% down payment may amount to a similar sum as the previous 15%.
„This is also shown by decreased sales: in January, nearly 700 new apartments were purchased in Vilnius, while in July – 389. Buyers have become more cautious because buying housing is becoming more difficult. Moreover, a smaller down payment is accompanied by more expensive loans and stricter assessment of residents’ creditworthiness,“ he adds.
According to data from the Bank of Lithuania, at the beginning of June, the 6-month EURIBOR was about 0.4 percentage points higher than before the conflict in the Middle East. As a result, a 130,000 euro loan taken for 25 years increases the monthly payment by about 28 euros. Interest rates on new housing loans rose from 3.7% to 4% from January to June, and EURIBOR may continue to rise, says the „Realco“ representative.
Since August, the creditworthiness assessment procedure has also changed. Until now, the loan payment could not exceed 40% of income, and the payment calculated with 5% interest – 50%. Since August, there is only one requirement – the payment calculated with 6% interest cannot exceed half of the borrower’s or co-borrowers’ income. This applies even when the actual interest rates are lower.
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„For example, when buying a 211,200 euro apartment with a 10% down payment, the loan amount would be about 190,100 euros. Taking it for 30 years and repaying it annuitized, under the 6% interest test, the monthly payment would be about 1,140 euros. This means the borrower’s or co-borrowers’ net income should be twice as much – at least 2,280 euros per month. The bank may require even higher income because it assesses other financial obligations, family expenses, and income sustainability,“ explains the „Realco“ sales director.
Difficulties with the second and subsequent housing loans
According to M. Chmieliauskas, although conditions for first-time homebuyers are easing due to the down payment, they are tightening for those taking a second or subsequent housing loan. The latter will still need a 30% down payment, but since August it has become harder to use an exception to reduce it to 15%.
„Until now, a 15% down payment could suffice if the balance of the previous loan did not exceed half of the mortgaged property’s value. As real estate prices rose, more people met this condition, although they had not yet repaid half of the loan. Since August, the growth in property value is no longer enough – more than half of each existing housing loan amount must be repaid,“ notes the „Realco“ representative.
For example, when buying real estate for 211,200 euros, a first-time buyer’s 10% down payment would be about 21,100 euros, while taking a second or subsequent loan with a 30% down payment would be about 63,400 euros. Because of this, according to the Bank of Lithuania’s assessment, some residents may have rushed to use the old rules in 2025 – the flow of second housing loans increased by about 70%.
These changes aim to somewhat complicate borrowing for investors and simultaneously slow down the growth of real estate prices, making it easier for first-time homebuyers to purchase. However, according to the „Realco“ representative, the question remains how effective this will be in practice.
„According to our data, a significant portion of people buying a second or subsequent home allocate much more than 30% of their own funds, and in some projects, almost 40% of buyers do not borrow at all. Therefore, stricter conditions for investors may have limited impact – they are less sensitive to the size of the down payment and often view real estate as a long-term investment. Meanwhile, for first-time homebuyers, the benefit of a smaller down payment may quickly be outweighed by further rising housing prices,“ says M. Chmieliauskas.
