Mortgage Loan Rates in 2025 – What to Consider Before Taking One?

A mortgage loan is one of the most significant financial commitments individuals undertake to purchase or renovate real estate. These loans usually involve large sums and are issued for long periods, often 10 to 20 years. The key characteristic of a mortgage loan is that it is secured by the property itself—this means that if the borrower fails to meet their obligations, the bank has the right to seize the property and sell it to recover the outstanding debt. This collateral makes mortgage loans less risky for banks compared to unsecured consumer loans, which is why their interest rates are generally lower.

According to the National Bank of Georgia’s data from January 2025, the average mortgage loan interest rate in Georgian lari (GEL) is 13.3%, while in foreign currency, it is 7.1%. This means that taking a loan in foreign currency is nearly twice as cheap, but it carries exchange rate risks. It should be also noted that interest rates vary by loan term minimally. 

For banks, mortgage loans are relatively low-risk because if a borrower defaults, the bank can sell the property to recover the loan. This security is why mortgage loans are issued at significantly lower rates than consumer loans, which lack collateral. However, the longer the loan term, the greater the bank’s expenses and financial uncertainty, which is why long-term loans may have slightly lower rates but still remain relatively high.

What Should You Consider Before Taking a Mortgage Loan?

Choosing a mortgage loan should not be based solely on the interest rate—several key factors must be analyzed to make an informed decision.

First, the loan term and total cost. As the data shows, the average interest rate for a mortgage loan in lari is 13.3%, meaning that over a long period, the total amount paid in interest could equal or even exceed the original loan amount. For instance, if you take a 100,000 GEL loan for 20 years at a 13% interest rate, the total repayment amount could exceed 250,000 GEL.

Exchange rate risk is also a crucial consideration. Although foreign currency loans are cheaper (with an average rate of 7.1%), if the borrower earns income in lari but takes a loan in US dollars or euros, currency depreciation could significantly increase their debt burden. The 2008 financial crisis and the 2015 lari depreciation serve as reminders of how exchange rate fluctuations can severely impact borrowers repaying foreign currency loans with lari-denominated income. For this reason, the National Bank enforces strict regulations on foreign currency loans, primarily approving them for borrowers who earn income in USD or EUR.

Another major factor is monetary policy and banking regulations. When the National Bank raises the refinancing rate, mortgage loans become more expensive. If inflation is high, banks increase interest rates to hedge against future devaluation risks. Additionally, banking regulations that assess borrowers’ repayment ability could tighten loan conditions, especially in times of economic uncertainty.

How Will Mortgage Interest Rates Change in the Future?

Recent trends indicate that mortgage rates in lari are slightly decreasing as the National Bank tries to control inflation. However, if economic conditions worsen, mortgage rates could rise again. Global interest rate changes, such as policies set by the US Federal Reserve or the European Central Bank, also impact the Georgian market—if US dollar rates increase globally, foreign currency loans in Georgia will become more expensive.

For borrowers, it is essential not to choose a mortgage loan based solely on the lowest interest rate but to carefully consider income stability, currency risk, repayment ability, and long-term financial plans. A mortgage loan is a long-term commitment that can significantly impact financial well-being for decades, so making the right choice depends not only on loan conditions but also on a thorough personal financial analysis.