Housing lending in the regions of Latvia has significantly increased, with nearly one-third of mortgages issued by SEB Bank last year allocated for purchasing or constructing homes outside of Riga and its outskirts. Funding in the regions grew by 46% compared to the previous year, with high demand noted particularly in smaller towns in the Vidzeme region, and lower demand traditionally observed in Latgale. This surge in credit demand is largely attributed to a substantial decrease in interest rates by the European Central Bank, which has given consumers a sense of stability and potential savings on monthly payments.

The head of personal financing at SEB Bank, Māris Opincāns, explains that the reduction in the Euribor rate has played a crucial role in this upward trend in housing loans. The drop in rates has not only improved consumers' financial situations but has also increase their confidence in taking out loans. For instance, a €100,000 mortgage at a 2% Euribor rate previously might see significant savings on monthly payments compared to the previous norm, encouraging more residents in the regions to pursue homeownership.

However, this increased lending also shines a light on potential underlying issues within the shadow economy, suggesting that as more individuals seek housing loans, there may be concerns related to unregistered income or informal financial practices that accompany this growth. As the lending environment becomes more favorable, it raises questions about the sustainability of these economic practices and whether they can accurately reflect the genuine financial capabilities of borrowers in the regions.