AMRON-SARFiN Report 2/2015
The results of Q2 2015 is a perfect example confirming the seasonality of banks’ lending activity, resulting from the seasonality of their customers’ activity in the residential investment market. After a very poor results of the first quarter, situation on housing loans market in the second quarter was characterized by growth unprecedented for several quarters. Banks granted 46 504 new housing loans for a total amount of PLN 10.058 billion. Comparing to Q1 2015 this means an increase of value of newly granted housing loans by 12.03%, and the number – by 10.28%.
Partly this was an effect of continued very low PLN interest rates and attractively low transaction prices. There is also a new factor – the take-strength political campaign launched against banks and announcements imposing on banks new financial burden are seen as a threat to savings deposited in banks. According to information published by the National Bank of Poland, the accumulated amount of deposits in Polish banks decreased by more than PLN 5 billion in period from February to June 2015. These money supplemented by mortgage loans appeared on the real estate market. Investment on real estate market is not only more profitable than bank deposit, but also appears as more secure in the current situation.
When will better times for savers come? Lack of government savings programs, which offer opportunities of systematic collection of own contribution, results in more favourable banks’ offers for affluent families. Only during last two years, the share of Warsaw in the location structure of new loans increased from 26.4% to 37.1% and reached a maximum level in the history of our studies. In Q4 2008 this level equaled to 35%.
Analysis of the structure of new loans in terms of the LtV ratio and repayment period confirms that banks have adapted to the requirements of the Recommendation S. At the same time it doesn’t confirm the concerns on restricted access to mortgage loans by own contribution requirements. More than 52% of new loans did not exceed 50% of the real estate value. The average value of housing loan has stabilized at the level of PLN 210 000.
Spring revival was also noted on the housing market. In Q2 2015, permits were issued for the construction of 47 977 dwellings, which means an increase of 25% comparing to the previous quarter. In the period from April to June, the number of started constructions of new housing units was doubled and amounted to 48 501, while the number of completed constructions increased by only 1% on quarterly basis and amounted to 32 031 units.
In Q2 2015 only slight changes of the residential units’ average transaction prices were observed in the eight largest Polish cities. A slight decrease (by about 50 PLN/sq.m.) of the average transaction prices per 1 square meter was noted in Poznan, Lodz and Gdansk. In two urban centers, i.e. Bialystok and Katowice agglomeration, the average prices remained at the same level as previous quarter. An increase was recorded in Wroclaw (by 58 PLN/sq.m.) and in Warsaw (by 86 PLN/sq.m.) – the average transaction prices per 1 square meter in these cities amounted to 5 534 PLN/sq.m. and 7 354 PLN/sq.m. respectively.
The final form of the act on special rules for restructuring mortgage loans denominated in foreign currency due to changes in foreign currency exchange rates and the amendment of other laws, currently being discussed in Parliament, will effect on the availability of bank loans, including mortgage loans. The politicians’ desire to please a group of over 600 thousand CHF borrowers – potential voters – will lead not only to higher costs of PLN loans, but also may result in limited access to mortgage loans for those, who would like to improve their housing situation in the future. Answer to the question on constitutionality of that law I leave for specialists. However, I can comment with full responsibility the impact of this act on the condition of Polish loan market (not only housing loans). I believe this is a very bad solution – unsatisfactory for most of CHF borrowers and unfair for those, who – aware of the risks – acted responsibly and decided to take loans of lower amount or take a loan in domestic currency. This act is also discriminatory for those, who did not take a risk and still did not improve their housing situation. In such circumstances, it is extremely difficult to predict the results of the housing loan market at the end of the election year 2015.
Jacek Furga
Head of AMRON Centre
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