In English

A man I know in Vilnius, a software developer in his late thirties, has about 17000 euros sitting in his second pillar pension fund, and he genuinely cannot decide what to do with it. He has been thinking about it for months. He has talked to friends, asked his accountant, read three or four explainers, and the file on his kitchen table is still open to the same spreadsheet he was staring at in November. The withdrawal window opened on January 2, 2026, and runs until the end of 2027. Every quarter, he tells himself he will decide by the next one. He is not unusual. A survey by Spinter Research, commissioned by InRento, found 45 percent of Lithuanian savers plan to pull their money out during the window, and another 35 percent have no idea what they are going to do. Three out of four people with second pillar accounts are either leaving or still frozen at the kitchen table. About 1.4 million Lithuanians have money in the system, and total assets sit above 9 billion euros. The Bank of Lithuania has modeled scenarios where 40 to 60 percent of savers exit, pulling up to 3.4 billion euros out over the two year window.

Not long ago, the governor of the Bank of Lithuania stood in front of reporters and called the situation with deposit rates “obscene.” The ECB had been raising rates for months, mortgage rates had crossed four percent, consumer loan rates were pushing nine percent, and Swedbank was still paying its Lithuanian depositors a flat 0.2 percent on fixed term accounts. SEB had moved to 0.6 percent. On a ten thousand euro deposit left for twelve months at Swedbank, that worked out to twenty euros in annual interest, which is roughly what you’d tip a waiter for a nice dinner in Vilnius. The central bank’s message was unusually blunt for an institution that typically speaks in careful hedged language: banks were passing every rate increase to borrowers and almost none of it to savers, and that was not acceptable. What the regulator probably did not fully anticipate was that the pressure would eventually come not from regulatory speeches but from a British fintech with a Lithuanian banking licence.

When a loan officer in Vilnius shows a buyer how a 35 year term reduces their monthly payment versus a 25 year term on the same loan, the number looks compelling. On a 153000 euro mortgage at around 3.7 percent interest, the difference is about 132 euros a month, which covers a phone bill, a grocery run, and something left over. February 2025 was the biggest month for mortgage lending in Lithuanian history, with banks issuing close to 240 million euros in new housing loans, nearly twice the volume from the same month in 2024, and that record sits partly on falling rates pulling buyers off the sidelines and partly on something quieter, which was that some of those buyers qualified for their loans specifically because the bank agreed to extend the repayment term. Interest rates on new housing loans had dropped from roughly 5.4 percent in mid-2024 to about 3.7 percent by mid-2025 as ECB cuts worked through the system, and the total value of new housing loans issued between January and July 2025 came to around 3.9 billion euros, with the outstanding mortgage portfolio growing nine percent since the start of the year to about 14.4 billion euros by August. The average maturity for a Lithuanian mortgage has historically been around 30 years, and a meaningful portion of new loans now go out to 35. The 132 euro monthly saving is real. What the buyer does not model, at least not in my experience of talking to people who have just signed, is what that saving costs over the full life of the loan.

Aurimas Vaška, a contractor from Kaunas, took out a 6000 euro consumer loan in the spring of 2022 to cover a bathroom renovation he had been putting off for two years. At the time, his bank quoted him a rate of 11.4 percent APR, which he accepted without shopping around because the process was straightforward and the monthly payment of just under 140 euros felt manageable against his income. He didn't think much about the rate after that, paid his installments, and generally ignored the financial news cycle about central bank policy through 2023 and into 2024. By late in that year he found out, through a conversation with a colleague who had just borrowed from the same institution, that new consumer loans were going out at 9.1 percent and had been for some months. That's when Vaška called his branch manager and asked, for the first time since signing, whether his rate could be revised. It couldn't, the manager told him, at least not partway through the contract, but the number of similar calls that manager was probably fielding by then is roughly the story of where the Lithuanian consumer lending market finds itself in 2025.