On Wednesday, 6 December, the Saeima adopted in the final reading amendments to the Consumer Rights Protection Law, providing for a 30 % compensation of total interest payments for borrowers of mortgage loans. 

According to the amendments, for each loan agreement, the mortgage loan creditor is to calculate the amount of the compensation for total interest payments—30 % of total interest payments. This information should be submitted to the State Revenue Service (SRS). The compensation may not exceed two percentage points of the total interest rate set for the period.

The amendments provide that mortgage creditors are to submit the borrower’s bank account number for transferring the compensation to the SRS. The compensation will be calculated and disbursed once every quarter.

The SRS will transfer the compensation to each borrower, and credit institutions will notify their clients thereof via their online banking.

Disbursed compensations will be exempt from income tax and debt collection.

Compensations for interest payments apply to mortgage loan agreements concluded until 31 October 2023 with the outstanding balance not exceeding EUR 250 000. Loan agreements with a fixed interest rate over the entire repayment period are not eligible for a compensation.  

To ensure the disbursement of interest payment compensations, credit institutions must pay a mortgagor protection fee. The fee will amount to 0.5 % of the credit institution’s total outstanding mortgage loan balance.

The mortgage interest payment compensation and mortgagor protection fee will be in effect in 2024.

In the explanatory note to the amendments, the authors underline that the changes were needed to support households facing increasing mortgage loan payments as a result of a rise in Euribor reference rate, as most mortgage loans currently have a variable interest rate pegged to it.

Amendments to the Consumer Rights Protection Law will enter into force on 1 January 2024.

Saeima Press Service