Research: one in five Lithuanians do not have enough funds for home repairs Business

Lithuanian consumer optimism is the strongest in the Baltic countries

According to the survey, about a third of the respondents (35 percent of Lithuanians, 40 percent of Latvians and 34 percent of Estonians) plan to start or continue home renovations this year. 20 percent Lithuanians, 23 percent. Latvians and 30 percent of Estonian respondents indicated that they would like to repair their houses, but currently do not have enough funds for this.

Photo of Nendres Žilinskaitė/Aleksandras Izgorodins

According to Citadele Bank economist Aleksandrs Izgorodins, economic data reveals the mood of the Baltic residents. Data from the European Commission show that Lithuanian consumer optimism was the highest in the entire European Union in April, when Latvia ranked 13th in March, and Estonia ranked penultimate. What’s more, in April only in Lithuania and Poland consumer expectations were positive, i.e. optimistic. In all other EU countries, consumer expectations are still negative.

“The low level of optimism of Estonian consumers, especially compared to Latvia and Lithuania, has a significant impact on the relatively higher level of indebtedness of Estonian consumers. Eurostat data show that Estonian household debt amounts to 36.8 percent. GDP, while in Lithuania and Latvia – 21.8 and 17.7 percent, respectively. This means that Estonian consumers reacted relatively more sensitively to the increase in base interest rates in the euro zone – due to the higher level of indebtedness”, explains A. Izgorodins.

According to him, the first positive changes in consumer optimism indicators can already be seen in Estonia – in April, the expectations of Estonian consumers were 44 percent. better than 2022 in September, when Estonian consumer optimism reached a critically low level. In addition, consumers’ intentions to spend money on large purchases stabilized in Estonia, while consumer expectations in Latvia have already reached the long-term average.

Borrowing for housing needs is more active

Most of the respondents indicated that before starting the repair, they first save the necessary amount (43% of Lithuanians, 37% of Latvians and 32% of Estonian respondents). 5 percent Lithuanian and Estonian and 6 percent. Latvians are more inclined to take out a consumer loan for repairs, and another 5 percent. Lithuanians, 8 percent. Latvians and 10 percent Estonians indicated that they are postponing the repair because they do not have the opportunity to save the required amount or borrow.

Nendres Žilinskaitė’s photo/Rūta Ežerskienė

According to Rūta Ežerskienė, member of the board of Citadele bank responsible for retail banking in the Baltic countries, residents have been borrowing more actively for housing needs in recent years. In the first quarter of this year, “Citadele” Bank issued 19% of loans specifically for housing purposes. from all consumer loans. This is 47 percent. more compared to 2023 in the first three months.

“Although home repair requires considerable investment, it often cannot be postponed for a long time. For example, if mold accumulates in the house, windows are not sealed, radiators do not heat well, this can negatively affect the health of the people living there. In addition, repair is in a certain sense an investment that can significantly reduce, for example, heating costs and bills at the same time.

in 2022 as inflation increased, the purchasing power of the population and opportunities to save decreased. Therefore, it is natural that in 2023 in the second half, as the financial situation improved, people found it more attractive to borrow for housing renovation instead of spending their savings,” says R. Ežerskienė.

As the results of the survey reveal, in the hope of saving money, the majority of respondents intend to do the repairs themselves (44% of Lithuanians, 53% of Latvians and 54% of Estonians). 45 percent Lithuanians, 39 percent. Latvians and 37 percent Estonians are going to do at least smaller jobs themselves, and entrust more complex ones to professionals. Only one in ten (12 percent of Lithuanians, 8 percent of Latvians and 9 percent of Estonians) would entrust all repair work to professionals.