Mikołaj Fidziński, Gazeta.pl: Only about 14.1 thousand. people applied for a housing loan in July – according to the latest data from the Credit Information Bureau. It is nearly 70 percent. less than a year ago and the least for over 15 years since BIK has been collecting data. It is known – incl. this is why the MPC raised interest rates so that the demand for loans would slow down. But don’t these data show that the Council has failed?
Wojciech Matysiak, head of the real estate analysis team at PKO Bank Polski: When it comes to rate hikes, it is difficult to argue with it. We have high inflation, the economy had to be cooled down somehow.
It appears that the decisive factor for the demand for a mortgage was the recommendation of the Polish Financial Supervision Authority regarding the calculation of creditworthiness [od kwietnia br. banki muszą liczyć zdolność kredytową przy założeniu, że oprocentowanie kredytu wzrośnie jeszcze o 5 punktów procentowych wobec aktualnego; wcześniej było to 2,5 proc., więc zmiana uderzyła w zdolność kredytową wnioskujących – red.].
This recommendation came at a time when the market was already cooling down significantly due to rate hikes.
So the demand for a loan was already falling, and the KNF stamped it with a shoe with its recommendation?
It’s hard for me to argue if this 5pp buffer. above the current interest rate is a lot or a little. Instead, it seems to me that it should somehow depend on the market situation.
This should be counter-cyclical. When loan sales are very high and housing prices are rising very quickly, the buffer could be slightly higher. When the situation on the market is as it is today – we have a strong decline in sales of loans and apartments, and prices nieruchomo¶ci stopped growing – this tightening of credit conditions makes it even worse.
Do you see any chances for the bottom-ending demand for a housing loan to rebound in the near future?
In the next few months or even a year the chances of a clear rebound are slim until we see interest rate cuts.
Banks feel a decline in demand and competitive pressure in the mortgage segment. However, we do not see any restrictions on access to housing loans on the part of credit risk managers at banks – i.e. there is no repeat of 2008.
So banks want to borrow, only Poles do not have the capacity?
It can be said that banks try to provide as much credit as possible. But market conditions are really very difficult and I don’t think the situation will get any better. There is a chance for this only when interest rates begin to decrease.
Can margins be lowered in banks? This might boost the lending a bit.
Banks at the beginning of the year were more inclined to cut loan spreads, seeing deterioration in sales and growing competitive pressure in the sector. Now I don’t know if there are any such plans, but I am concerned that credit risk managers may be blocking them.
Why?
From the point of view of risk, it is not advisable to ease the credit conditions when, for example,in. apartment prices may be at the top and will fall soon – and the value of the apartment is a security for the mortgage. I think we are dealing with such a turning point in the market.
- Read more about housing loans on the home page Gazeta.pl
So what about these housing prices? You can see that they are already braking. Will the fall you are predicting more like a plateau or a massive crash?
I think already in the data for the third quarter, we will see price drops, and they will last for about a year and a half. I expect this to be a correction for the rise in prices in the second half of 2021 and early 2022.
It was a very strong increase, mainly caused by increases in the prices of building materials by several dozen percent. The rises in housing prices took place in the conditions of declining sales and price availability of apartments. Housing prices began to rise significantly stronger than salary. Then there was interest rate hikes and the recommendation of the Polish Financial Supervision Authority. Fundamentally, there was no “fuel” to increase prices at that time.
Translating into specific numbers – you should probably be prepared for even two-digit drops in housing prices?
This can be a drop slightly above 10%, but not, for example, 20%.
Where will this “motivation” to reduce housing prices come from?
First – there is a shortage of demand. In the largest agglomerations, there are several percent of unsold flats in ready-made investments. In smaller cities, this percentage may even be higher. Developers will be willing to offer promotions for these ready-made flats.
As for new investments, I am counting primarily on disinflationary processes. Besides, their first symptoms are already visible. The monetary policy started to tighten the major central banks. You can see drops in prices on commodity markets – for example crude oil, which is used to produce plastics, but also metals, wood, etc. All the time these prices are high, but the drops are already visible and I think that this is a downward trend rather than a correction .
Another issue is full inventory. Data from the Polish and world economy show very large inventories with limited demand. There are chances that companies will want to reduce inventory, and this is associated with price reductions.
So if construction costs drop, developers will be able to offer customers lower prices?
Yes. Especially since they know there is a problem with demand and creditworthiness. The price reduction is absolutely justified in order to be able to sell the flats at all.
Hopefully such a scenario will take place. As a result, on the one hand, it will be possible to revive demand, and on the other hand, activity in housing construction will improve. For now, developers have stopped new investments, because at the current prices they are not able to sell anything. As soon as they are able to build cheaper, they will start again and may they find buyers for flats already offered at lower prices.
Watch the video
“Much, very fast”, “It’s lame”. Poles about their loan installments [SONDA]
–
What about NBP rates? Do you forecast further increases? Or maybe the current economic landscape may motivate the MPC to cut rates faster and stronger than it has so far predicted? President Glapiński hinted about the possibility of the first cuts at the end of 2023.
When it comes to the upcoming months, there may be one more hike, maybe none at all. It seems to me that the cycle is coming to an end. In the current macroeconomic environment, I do not see much reason to raise rates further.
I think there is a great chance for interest rate cuts at the end of 2023, maybe even halfway or earlier.
Optimistic vision.
As I said – we observe several factors that may indicate that we are at the peak of inflation. Of course – it is not known, for example, when the anti-inflationary shield will be lifted. In addition, we will inevitably face increases in energy prices at the beginning of 2023.
But we already know this and it is a derivative of what has already happened. At present, however, we see declines in commodity prices in the markets, and the tightening of monetary policy by the most important central banks significantly reduces inflationary trends. The specter of recession looms over the world, and the US economy is already in it. In addition, there are the aforementioned very high inventory levels.
There are many factors that indicate that inflation will fall, although of course there is also a geopolitical risk related to e.g. another war or breaking supply chains. But I can’t predict that anymore. If this happens, then of course the central banks will react on an ongoing basis. But if the scenario of diminishing geopolitical risk materializes, there seems to be a basis for the NBP to start lowering interest rates in 2023 – even hopefully sooner rather than later.
Let us return to the present day and the statutory credit holidays that Poles are applying for en masse. Will they ever have problems with, for example, buying a refrigerator in installments for this reason?
No, they won’t have such problems. Using with holidays loans at PKO Bank Polski does not affect the assessment of customers’ creditworthiness.
- Help Ukraine, join the collection. You deposit money on the website pcpm.org.pl/ukraina
–
