Consequently property prices have fallen by a quarter since last spring but asset quality remains good because only 17 per cent of households – typically the wealthiest – have mortgages, according to Hansabanka.I think Hansabanka's argument is flawed. What matters is the ratio between the mortgages and the income. Latvia's mortgage debt-to-GDP ratio is around 34%. Combine that with only 17% of households having mortgages and what you get is 17% of households having quite a lot of debt compared to their incomes. Even if those are mostly the wealthiest 17% of people.
There's no sign of large scale problems with Latvian mortgages at the moment, but Hansabanka's claim why problems should not happen looks flawed to me.