The Latvian Saiema adopted amendments to the Insolvency Act, but the introduction of the "left key" principle has been postponed until March 1, 2015. The amendments have been criticized by the banks, and the Swedbank have changed the amount of down payment on a mortgage from 10-15% to 30%.
The new amendments will be considered in 2015. The key principle probably will be applied in no particular order, but by choice.
The left keys principle (or Key principle) implies: if you can no longer pay for mortgaged property in Latvia – move out, leave the keys to the bank, and neither you nor your guarantors owe anything. Naturally, banks’ risks increase and they will try to compensate them for clients’ expense. Firstly, a more careful selection of candidates. Many will be refused to get a loan. Secondly, issue of smaller amounts. The percentage of borrowed funds will be reduced, and the first installment will reach 50% – many people simply do not have it. Thirdly, rates can rise.
Andrejs Kozels, Director of the housing department at Realia (Latvia) and the ee24.com expert, said that one of the Latvian banks had already moved on to the keys principle and the initial payment for the citizens there rose up to 30-40%. In other banks which operate without any risks, it is about 10% for new buildings and 20% for the secondary market. By the way, for foreigners there are other, stricter conditions.