13.02 thousand – so many potential borrowers applied for a home loan in October of this year. According to the most recent Credit Information Bureau data. That’s over 67 percent. less than a year ago (about 39.7 thousand) and 4.1 per cent. unless in September of this year. (about 13.6 thousand). In the history of BIK analysis, i.e. since January 2007, fewer people applied for home equity loans in August of this year alone. – about 12.4 thousand
It is worth noting that couples usually take out home equity loans, so there will be far fewer loans made in October (BIK will announce this in late November). For example, in September of this year. banks and credit unions granted “only” 7.3 thousand in total. home loans.
BIK also reported that the average value of the real estate loan requested in October this year amounted to less than 336.7 million. zloty. This is less than a year ago (4.5%) and a month ago (0.3%).
The small September light in the tunnel was about the fact that for the first time in six months on a monthly basis we had an increase in the number of applicants, in October it quickly faded and we returned to the downtrend on a monthly basis
– comments prof. Waldemar Rogowski, the principal analyst of the BIK Group.
Mortgage market collapse due to rising interest rates. Is the KNF also guilty?
The collapse in demand in the real estate mortgage market has been going on for several months, the next data have practically hit rock bottom. The reasons are immutable.
First, it is the interest rate hikes that have trampled the creditworthiness of Poles. What worries the Poles “satisfies” the president of the NBP, Adam Glapiński.
Without sustained credit growth, high inflation is hard to expect to persist over the medium term. And we kept our mortgage almost completely. The work has been done
– said the head of the NBP during the press conference in October.
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Second, this the regulatory screw tightened by the Polish Financial Supervisory Authority on the calculation of creditworthiness. Since April this year. banks must count creditworthiness assuming that the loan interest rate will not increase by 2.5 percentage points as before, but by as much as 5 percentage points. against the current one. With the current 3M WIBOR rate above 7.5%. the potential borrower must then demonstrate that he would be able to repay the loan with WIBOR – by more than 12.5 percent. This is prohibitive regulation for many borrowers.
In general, there is a lot of excitement around the KNF buffer. What basically stuff understandably, banks and developers don’t like it. In October, the president of the Association of Polish Banks asked the Polish Financial Supervisory Authority (KNF) on behalf of all banks to consider lowering the reserve, for example to 3 percentage points. However, the Commission has no plans to do so. The president of the Polish Financial Supervisory Authority Jacek Jastrzębski told TOK FM on Thursday that “there is still a very high risk of volatility in the financial markets” and that “nothing has changed significantly, which would justify a change in the interest rate buffer approach for credit assessment purposes. ”It implied that if there was room for discussion and preference, it was only in the case of fixed-rate loans.
In turn, at the end of October, the KNF unexpectedly strongly evaporated the development sector, which also blamed the recommendation for the deterioration of the situation in the real estate market.
If developers really care about the availability of housing for young Poles, they can change their margin policy in this regard. According to data from the Polish Financial Supervisory Authority, the development sector’s average gross profitability on sales for 2021 was 31% and for the first half of 2022 it was 29.4%.
– wrote the KNF, citing data on developers listed on the Warsaw Stock Exchange.
Will Loans Rebound After Lower House Prices?
The president of the Polish Financial Supervisory Authority, Jacek Jastrzębski, in the aforementioned interview with TOK FM, also stressed that in his opinion the collapse of the real estate mortgage market is “rather the result of the general macroeconomic situation than a consequence of the supervisory actions. alone”.
And this is also the third reason for the sharp drop in demand for home loans, identified by BIK. The Poles, fearing the effects of the economic slowdown, are holding back the decision to buy an apartment or build a house on credit.
According to Waldemar Rogowski of BIK, for the demand for home loans to unblock, it is necessary to “significantly increase creditworthiness, which depends on three factors: interest rates, salaries and sec nieruchomo¶ci“.
At the moment, property prices are more likely to fall. However, I would not count spectacular cuts that would greatly increase creditworthiness, thus stimulating demand for home loans. The main factor, however, is the level of interest rates, but they are unlikely to fall rapidly, quite the opposite.
– says prof. Waldemar Rogowski, the principal analyst of the BIK Group.
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