In connection with the publicly announced plans of the European Central Bank to further reduce interest rates, there is reason to believe that in 2024 the housing market in Latvia will finally be ready to break out from the influence of Euribor, says Jānis Murnieks, head of the private banking department at Citadele. interest in the housing market was observed in the second and third quarters of the year, but this year activity increased already at the beginning of the year. Data from Citadele Bank for the first quarter show that the number of mortgage transactions increased by 55%, while the number of applications for financing increased by almost a third or 27%. As Murnieks explains, the growth of interest is influenced by two factors. Firstly, some clients postponed the purchase of housing due to the unclear situation with Euribor rates. Now the ECB's rhetoric and market events indicate that the peak in interest rates has been overcome (the 6-month Euribor rate is now at its lowest level in the last 12 months). "It is the dynamics of Euribor rates that is the main factor determining people's sentiment towards buying a home. This has a significant impact, since the ECB's rate cut signals allow monthly payments to be planned and provide confidence that, at least in the short term, they will not will increase, and, most likely, will systematically decrease,” comments a bank representative. Secondly, after a slight drop in prices last year, housing prices have now stabilized. “Of course, there will always be buyers who have saved money and are ready to purchase real estate regardless of market conditions,” adds Murnieks. Standard-type apartments built in Soviet times still form the majority of the housing market and there is no reason to believe that anything will change in this regard in the near future. This is directly affected by the solvency of the population – most families can afford them, and over the past year, prices in this segment have also experienced a price correction of 5-7%, which has made them even more affordable. A recent survey conducted by Citadele Bank showed that 39% of Latvians are willing to spend 200 or 300 euros on a monthly mortgage payment. The bank's data also shows that the average monthly mortgage payment in a standard apartment is 290 euros per month, and in a new project – 812 euros. With a fall in Euribor rates, this imbalance may decrease, since loans for apartments in new projects tend to be issued for larger amounts and for longer periods. Over the past years, the number of transactions outside Riga has increased, in large cities, as well as in cities with a growing number of residents and a fairly large supply of housing on the secondary market. The most active regions in this regard are Jurmala, Marupe, Ropaz and Adazi regions. An increase in activity can also be predicted in Jelgava, Sigulda, Cesis and Liepaja, in turn, those who want to live by the sea are looking in the direction of Saulkrasti. As in Riga, in the regions standard housing is most often financed, and in coastal areas there is a high demand for ready-made private houses or land for development. If the ECB's previously publicly stated intention to cut interest rates by 0.5 percentage points by the end of the year comes true, monthly mortgage payments will also decrease, the bank's representative emphasizes. “In this scenario, people can expect to pay 4-6% less per month than before. Of course, it should be taken into account that the terms of each borrower’s agreement (down payment, contract term, loan amount) are individual,” adds He.