In December 2022, a total of 12.30 thousand applied for housing loans. of potential borrowers compared to HRK 33.16 thousand. a year earlier – this is a drop of approx. 63%. Compared to November 2022, the number of people who applied for a home loan decreased by 9.6%. Assumptions for 2023 look more optimistic and may be better for mortgage loans in Poland than last year. So, what factors can influence the improvement of the situation in this market?
The average value of the requested housing loan in December 2022 was PLN 347.62 thousand. PLN and was lower by 3.3% compared to the value of December 2021. However, compared to November 2022 it was higher by 3%.
As pointed out by prof. Waldemar Rogowski, chief analyst of the BIK Group, the December reading of the BIK index of demand for housing loans confirms the stabilization of the index’s value at a negative level of approximately -60%. Due to the base effect, the comparison with the lower values from 2022, the value of the Index itself could start to rise, this effect can be seen already from September 2022. However, in December 2022 we returned to the decrease in the number of applications again, and in both presentations y/y rom/m, with a slight increase in the average amount of the requested loan.
– Still high interest rates, tightening of regulatory requirements and fear of the effects of economic slowdown limit the demand for housing loans – explains prof. Waldemar Rogowski.
As the expert explains, the December value of the Index was negatively affected by a 63 percent lower number of applicants than the year before. This is one of the lowest results since January 2007, that is, 16 years since BIK analyzed the number of people applying for housing loans. Therefore, the negative scenario is still current, according to which a small number of people apply for a loan.
In accordance with the decision of the National Benchmark Reform Working Group, as of January 1, 2023, WIBOR has ceased to apply and has been replaced by WIRON. As of December 30, 2022, the difference in these two ratios is 0.82% at the 3-month rate and 0.91% at the 6-month rate in favor of WIRON. It may not seem like much, but this difference will definitely improve your credit score calculation a bit. The loan installment will be correspondingly lower, so your creditworthiness should increase.
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In April 2022, the Polish Financial Supervisory Authority imposed an obligation on banks to apply a 5% shock absorber in the loan interest rate when calculating creditworthiness. This means that for a loan with an interest rate of, for example, 9%, the creditworthiness is calculated as for a loan with an interest rate of 13%. The previous buffer was 2.5%. The Monetary Policy Council does not seem willing to raise interest rates further in the future, and perhaps that is why the KNF is considering the possibility of reducing the reserve. If we add to that the reform related to the change in the reference rate, the calculation of creditworthiness should improve significantly.
Banks are institutions that, among other things, were established for the purpose of granting loans. In unfavorable market conditions and KNF regulation, the only move they can make is to change the credit policy.
– In the following months of 2022, we saw how banks are increasingly giving in and accepting things that were unthinkable before. Several banks have started recognizing the 500+ convenience as a source of income. The rules for the recognition and calculation of income have been changed, which are more favorable for entrepreneurs who change the form of taxation of their activities, and the so-called industries at risk – says Andrzej Łukaszewski, Credipass financial expert.
– We can expect that in 2023, banks will continue to relax their lending policy in order to increase the creditworthiness of their future clients – adds Andrzej Łukaszewski.
Already in 2022, the government tried to stimulate the market with a down payment guarantee system when buying real estate with a mortgage. The effectiveness of this program is highly debatable, but changes are being announced to increase its availability.
The draft of another government program for people buying their first apartment was also presented. As announced, you will be able to take advantage of a preferential loan with an interest rate of 2%. The second assumption of the new program is the creation of something like old housing booklets, which, with the support of budget funds, would in the future be entered in one’s own contribution when buying real estate.
The level of inflation at the end of 2022, which fluctuated around 16-18%, meant that Poles began to analyze their expenses in a completely different way, but also to look for ways to increase their salaries.
“We have become more willing to move to a better paying job and more courageous in asking for a raise from our employers. People who already have credit obligations and people who plan to borrow in the near future, and after a year know how important the level of their income is in all of this, notes the Credipass expert.
Based on a survey of financial experts by Credipassa in December 2022, 26% of respondents believe that real estate prices will rise in 2023. The remaining part believes that prices will remain at a similar level or fall.
For people planning to buy a property in the next year, this would be very good information. Stopping price increases or reducing them will lead to the need to take out a smaller loan for which it may be easier to obtain creditworthiness.
Last year, and already at the end of 2021, most clients refused the doors of banks because they could not get a loan in the required amount. However, their housing needs have not disappeared – they have shifted in time. Throughout this period, clients tried to change their financial situation, close existing obligations and collect a higher personal contribution.
Perhaps 2023 will be the time when, given favorable market conditions, customers who previously could not pay the loan will return.
– In order to change the trend, it is necessary to significantly increase creditworthiness, which depends on four factors: interest, wages, real estate prices and living costs. At the moment, the most likely fall in real estate prices, while wages will fall in real terms from the summer of 2022, interest rates will probably not be lowered in the next year, and the cost of living for households, even with falling inflation, will only grow less, according to Prof. Waldemar Rogowski.
In the coming quarters, real estate price reductions are possible on both the primary and secondary markets, but they will not be significant enough to significantly increase the demand for housing loans in the coming quarters, predicts the chief analyst of BIK Group.
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