Lithuanian lawmakers order banks to offer fixed-rate mortgages as well

VILNIUS – Lithuania's bigger banks will have to offer their customers the opportunity to pick the type of interest on mortgages and to offer them at both variable and fixed rates.

The Lithuanian parliament on Thursday adopted the necessary amendments after 103 MPs voted in favor, there were no votes against and two lawmakers abstained. 

The Seimas obliged banks to provide people with at least two alternatives of choosing a mortgage with a fixed rate for at least 5 years or a variable interest rate. Banks that could not offer a 5-year fixed-rate offer would have to propose ways to reduce or manage the risk of fluctuations in variable interest rates for at least 5 years. 

The new rules will apply to financial institutions with a mortgage portfolio exceeding 50 million euros.

According to the Bank of Lithuania, last year, on average 3 percent of new loans were issued at an interest rate fixed for more than one year, compared to 78 percent in the euro area.