Central bank taking steps to prevent heating up of real estate market

The Lithuanian central bank proposes to tighten the down payment requirement for the second and subsequent housing loans and to set an additional 2 percent capital buffer for lenders' housing loan portfolios in a bid to prevent the heating up of the real estate market.

"The new requirements are planned to enter into force on 1 January and 1 July 2022, respectively," the Bank of Lithuania said in a press release on Tuesday.

Gediminas Simkus, the central bank's governor, is holding a news conference later on Tuesday to comment on the proposals in more detail.

The latest survey conducted by the Bank of Lithuania has shown that commercial banks operating in the country forecast a further increase in real estate prices.

All surveyed banks expected an increase in prices for new-build apartments, and eight out of nine said prices for old-build apartments were likely to rise. Two respondents thought that prices would jump by more than 10 percent.