LBA, which protects 9 clients, ceases operations. His latest door-to-door recession is a study of housing loan contracts. The results, which seem bad, are contracts, both unfavorable and confusing and expensive, and potentially contradictory to the law.
The Lithuanian Banking Association does not agree with this: banks are transparent and responsible businesses, observe all laws and take care of accurate information.
The Bank of Lithuania welcomes the initiative of the clients' representatives, but skeptical about LBKA's conclusions – they have to be checked. According to the institution, the laws are valid for everyone, their failure will be subject to sanctions, so banks will follow them closely.
But the debt burden in Lithuania is one of the largest in the eurozone. According to the European Central Bank, the price of mortgage loans in Lithuania currently exceeds the majority of other countries in the region – the benchmark annual interest rate is 2.41%, on average 1.81%. The Finns enjoy the lowest interest rates – only 0.89%.
Bank customers are trying and the result is "no"
15min however, the head of the LBA explained that this would be the last comment – the association ceased activity.
– Our association, I finish this activity. I see that she is not active, we can not achieve anything special and there is only one language that says nothing. That's what we stop doing, "says Paukste.
Picture of a personal archive / Bird Bird
He admits that the association loses and does not attract a large number of members.
"We are talking a lot about the closure of the branches of the banks, so Lithuania is divided into two – using the Internet and a lot of those who do not use it. Some have the same opportunities and conditions, others have worse conditions that are most sensitive and difficult to live. What we are going to talk about here, unfortunately, is nothing. To transfer money to the bank's branch, you have paid € 5, which is the average hourly wage, "says Paucce.
The LBKA chief explains that he hopes to expand the association to a larger extent that could have an impact because "all EU citizens have the right to access low-rate loans, banking services – and this is not the case with us."
"We have not been able to oppose our arguments against the behavior of banking professionals," said Paucci.
He sadly laughs: Earlier, the inhabitants of Kaisiadori were laughing at the inhabitants of Electrenai who came here to the bank department to manage their financial affairs, and now the inhabitants of the two cities must go to Kaunas.
"In our banking sector, competition is reversed – if a bank increases the price, then others will rise. When he is in the normal business, and vice versa – if someone stops the course, everyone else is forced to reduce, "says R. Paukste.
123rf.com photo / Credit
Rated: Contracts – unfavorable
LBA conducted a study and assessed the mortgage credit agreements of the three largest banks before decommissioning. The study is funded by the State Consumer Rights Authority (WBAT).
The contracts of the three largest banks rated have received a minus sign: they are useless, complicated for consumers, do not comply with the law, and tariffs are often maximum.
The Lithuanian Banking Association strongly disagrees with this and the Bank of Lithuania also has doubts. Thanks to the Association for the Financial Education Initiative.
Taxes are almost maximum
LBA has determined that all banks apply a contractual fee. All banks apply 0.4%. but also applies a minimum amount that is the lowest in Luminor – the loan agreement will cost at least 140 euros.
SEB Bank is the only one to pay a loan, even when the loan is repaid, and is very small – it costs 3 euros.
SEB and Luminor additionally apply a "commitment fee" for the unused portion of the loan – typically 0.4%. part of the unused loan. True, if the interest is fixed, Luminor will charge 2.5 percent. unused portion of the loan.
Changing the credit agreement is extremely painful in all banks: at SEB Bank it will be less than 150 euros, and in some cases may reach 3.5 percent. credit balance.
Swedbank received LBKA's worst estimate of contract changes – minus 5 points. For Swedbank, when interest rates or margins change, 0.4% will apply. the amount of the outstanding loan, but not less than 180 euros. EUR 180 should be set to change the terms of the loan, the collateral or other conditions. The review criticizes the uncertainty surrounding the application of the tax – 1.5%. the fee for the outstanding loan and higher.
15min. Reader photo / Swedbank
"Such uncertainty about the amount of the tax (the price) is unfavorable to the consumer and must be taken into account before the mortgage contract is concluded," the review said.
Luminor will pay home loans at least 150 euros or 0.5 percent. amount of credit. In some cases, however, they will ask for more – pay up to 3 percent. compensation for the remaining amount of the loan when the currency of the loan is changed, the term of validity of the interest rate is shortened, etc.
Scanpix / SIPA Photo / Eur
Banks can modify the course unlawfully
The Loan Act with regard to NT promises the obligation for banks to specify the procedure for changing the applicable rates. "Unfortunately, none of the housing loan contracts meets this requirement," summarized in LBKA's review.
"The terms and procedure for the change of bank charges (tariffs) set in all the credit agreements that have been assessed are considered unfair and illegal," the survey concludes.
It is noted that in the case of the SEB Bank Loan Agreement, the changeover procedure is not at all clear and that under the credit agreements of the other two banks banks have the right to change the applicable rates at any time.
"All credit agreements were assessed on condition that banks were unjustifiably refused to accept creditors' requests for relief from surplus collateral," summarizes the study, and notes that the SEB and Swedbank agreements entitle them to reject applications for any reason.
123FR photo / Own house
Banks also include cases where borrowers may be asked to deposit additional assets. The Luminor Credit Agreement contains one such case, SEB Bank has 2 cases and Swedbank has more than 20 cases counting LBKA.
And when banks can increase their interest margin? The SEB Bank Loan Agreement provides the basis for an increase of 1 margin, Swedbank 10 and Luminor 11, to increase the margin.
"Part of the margin increase in Swedbank and Luminor's credit agreements is illegal, y. – contrary to the requirements of the legislation, "- evaluates the study.
The largest margin can be increased by SEB (1.5 percentage points) and other banks by 1%. point.
LBKA also found that all banks apply maximum interest rates, and in some cases Luminor may even exceed the legal maximum.
To extend the loan, SEB and Luminor will apply up to 3%. Swedbank does not charge a fee on the amount to be recovered.
"Assessing the grounds for unilateral termination of contracts for home loans contracts, it was found that all assessed credit agreements contain some of the grounds for unlawful termination of the credit agreement. Moreover, the unilateral cancellation procedure provided by SEB Bank and Swedbank's lending agreements is partly incompatible with legal requirements, "the study said.
All credit agreements were rated minus, which, according to the LBA, means that they are unfavorable to consumers.
R. Pauxte: This is the most important employment contract
The head of LBKA explains that the purpose of the study is to show people the meaning of their contracts.
"Now people are usually not well aware of them. And they can not read them too much because banks are making sure that these contracts are not legible or understandable. This can be seen to the extent they are written. These are very long contracts, "says Paucce.
47-73 thousand prints will make 26-41 pages in normal font.
"This is the most important contract in life because the sum is enormous, the period is very long, what will happen during this period – no one can say in advance." And these agreements are such that one does not have enough competence and experience to evaluate them, "says R. Paukste.
He assures that all contracts have significant deficiencies, are unfavorable to consumers and are in conflict with the law.
"I really think it will not be difficult to prove in court because the contract can not contain things that one does not know in advance, and the bank can do the way it wants – to impose some tax, to change its size or some conditions, "he says. .Paukštė.
He criticizes the principle of bargaining in general – this is an agreement between the two parties, but one party has to pay for it.
"Normally, if we sign a contract, both parties know whether the contract is appropriate for both parties or not. In this case, banks are not obliged to tell them to negotiate, negotiate, write or write to them as they please, to protect the interests of the bank and nothing on the part of the consumer. (…) Details – Many contracts include a fee for this contract. Banks enter into contracts on their own, unilaterally, and a person pays a fee for this contract. Quite a high fee, "regrets LBKA's head.
He is appalled by the fact that in some contracts bank interest rates are calculated using formulas that contain unclear variables, "can be manipulated" or are not explicitly disclosed.
Mr Paukštė hopes the study will not come to the drawer and that the work started by SCRPA will continue and the banks to which the study is presented will draw attention to the findings.
Bank representative: useful for financial literacy
Mantas Zalatorius, president of the Lithuanian Banking Association, confirmed his knowledge of the results of the survey, but questioned his value – "contributing to the development of financial literacy."
"Scope, content, and even pre-contractual information about housing loan agreements are regulated in detail in the Law on Loans for Real Estate. Banks are not only strictly regulated but also transparent and responsible business. We comply with all national and international regulations governing their activities and the requirements of the Bank of Lithuania. In addition, we are constantly working to ensure that people get accurate information about our activities and the services we provide, "says M. Zalator.
Photo by Luca Baland / Mantas Zalatorius
According to him, however, the study may be useful in another aspect.
"The comparison of the LCBA credit agreements for several banks contributes to the development of financial literacy. By demonstrating to residents how to analyze different market offerings, identify differences, and make financial decisions based on them, we develop a responsible and financially literate customer. In this area, we see a significant contribution from this organization, "says M. Zaltori.
Methodology of research is the main issue.
For example, there are two times more credit institutions on the market than the three banks in the survey. We believe that the public should not be misled in grim summaries by committing to many fragmented ideas, "says M. Zalator.
Representative of the Bank of Lithuania: good initiative, review
Mindaugas Shalcius, Director of Financial Services and Markets Division of the Bank of Lithuania, congratulates the clients' initiative, but the results are not convincing.
"We welcome the initiative that consumer associations are trying to make an independent analysis and we fully support the attempt to compare the products of different market participants and make recommendations to consumers. However, due to the conclusions and interpretations, I would prefer to abstain, "says M. Salcius.
Photo by Julius Kalinskas / 15min / Lithuanian bank
According to him, allegations that the treaties do not meet the law, "to put it mildly, thicken".
"The Housing Loans Act has been in force for over a year and a half, and we really appreciate that these contracts are in conflict with the law and we respond to complaints if we do. We have not found any fundamental discrepancies in the law. Of course, we will review the survey, and if the information is confirmed, we will, of course, respond, "says M. Salcius.
According to him, if banks violate the law, they will not only have to eliminate the shortcomings of the contracts but will also be affected by the corresponding "sanctions".
"The violation of the law can not be done by anyone, including the banks," says M. Salchius.
Interest is higher than the EU average
According to the European Central Bank (ECB), the interest rates applied by banks for home loans in Lithuania are higher than the euro area average. Last year, they reached 2.41%, with the eurozone averaging 1.81%.
The lowest mortgage burden is borne by Finns, Portuguese and Slovaks – 0.89%, 1.36% and 1.47%, respectively. The Greeks, Irish and Latvians have the greatest interest – 2.82-3.15 percent.
Greater interest in Lithuania is inconceivable here – the risk for banks – the country's credit rating (A) is higher than, for example, Portugal (BBB-), Italy (BBB) or Spain (A-) the interest rates paid by these countries are lower.