Latvia’s Mortgage Market Sees Significant Savings Through Rate Reductions and Refinancing

Latvian mortgage holders have collectively saved millions of euros through reduced interest rates and refinancing activities, according to data released by the Bank of Latvia. Changes to regulations and the expiration of compensation programs have spurred increased activity in the mortgage market, benefiting borrowers across the country.

Rate Reductions and Refinancing Trends

In January 2026, adjustments were made to existing mortgage rates in 327 cases, with 43 loans re-credited. As of January 2026, the total balance of loans with reduced added interest rates reached 25 million euros, representing 0.5% of Latvia’s total mortgage loan portfolio. Cumulatively, since the beginning of 2025, the balance of loans benefiting from reduced rates has reached 860 million euros, exceeding 18% of the mortgage loan portfolio at the start of 2025.

Borrowers who reduced their rate with their existing lender have seen an average reduction of almost 0.5 percentage points, while those who refinanced their mortgages have experienced savings of around 0.7-0.8 percentage points. This translates to average annual savings of 350 to 500 euros per borrower.

Total Savings and Market Impact

The Bank of Latvia estimates that the total annual savings for borrowers since the beginning of 2025 has reached four million euros, with a projected total savings of 55.2 million euros over the remaining term of the loans. In 2025 alone, 11,505 mortgage loans had their added interest rates reduced, exceeding 840 million euros or 18% of the mortgage loan portfolio at the beginning of the year.

Regulatory Changes and Consumer Incentives

Amendments to Latvian regulations in 2024 aimed to simplify the mortgage recrediting process between lenders. However, initial uptake was limited due to a consumer protection law adopted in December 2023, which provided compensation of 30% of total interest payments. Borrowers were hesitant to refinance before this compensation expired in January 2025, as doing so would forfeit their eligibility.

Resources for Borrowers

To assist borrowers in evaluating their options, the Bank of Latvia has published an interest rate comparison tool and a refinancing calculator on its “Naudas skola” website. Naudas skola provides step-by-step guidance on the recrediting process and answers to frequently asked questions.

Latvia in 2026

In 2026, Latvia assumed a two-year non-permanent seat at the United Nations Security Council on January 2nd. Latvia, Lithuania, and Slovenia co-hosted the UEFA Futsal Euro 2026 from January 18th to February 8th. More information on events in Latvia in 2026 can be found on Wikipedia.