Latvia’s Lending Growth Continues in August Outpacing Eurozone Averages
In August 2026, corporate and household borrowing in Latvia maintained positive momentum, with non-financial corporate loan balances rising by 10.3% year-over-year according to European Central Bank data. This growth rate outpaced the broader eurozone, where corporate loan portfolios expanded by just 4.2% over the same twelve-month period.
Corporate Credit Expansion Slows While New Lending Volume Climbs
Although corporate lending continued to expand, the pace of growth moderated across the sector. Latvia slipped from fourth to sixth place in the eurozone for annual corporate credit growth between July and August. Total newly issued corporate loans during the first eight months of 2026 climbed 12.2% higher than the corresponding period in 2025, demonstrating active demand for financing as banks continued to support client investment projects.
Financial sector representatives point to the bank solidarity levy as a primary drag on long-term competitiveness and client loan pricing. Uldis Cērps, board chairman of the Finanšu nozares asociācija, noted that maintaining an additional tax burden on the financial sector lacks objective justification given moderate bank profitability and normalized European Central Bank interest rates, urging policymakers to scrap the levy starting in 2027.
Household Mortgage Lending Accelerates Amid Higher ECB Rates
Household borrowing for home purchases rose by 9.2% year-over-year in August, significantly outstripping the 3.0% average growth rate recorded across the eurozone. Newly issued housing loans during the first eight months of the year increased by 11.7% compared to the previous year, backed by rising resident incomes and high transaction activity in the domestic residential property market.
Borrowing costs adjusted upward after the European Central Bank raised refinancing rates by 25 basis points on both June 11 and September 10, though interest rates remain below post-pandemic peaks. Cērps emphasized that future housing credit growth depends heavily on consumer solvency and borrowing expenses, while corporate expansion relies on business investment appetite alongside government economic, tax, and security policies.
Loan balances for non-financial corporations stood 10.3% higher in August than a year prior.