AMRON-SARFiN Report 2/2025

After four quarters of stability on the mortgage market, which turned out to be necessary to recover from the disruption caused by the ‘2% Safe Loan’ programme, lending activity accelerated again in Q2 2025. Compared to Q1 2025, the number of new housing loans increased by over 15%, while their total value – by as much as 21%. On a year-on-year basis, the increases amounted to 22% and 29%, respectively. During this period, banks issued 55 519 housing loans with a total value exceeding PLN 24 billion. The average value of a new mortgage also increased significantly, reaching more than PLN 443 000 at the end of June.

This systematic increase in the average value of new housing loans, despite a continued decline in their number, caused the total housing loans debt increased once again and, after four years, exceed the PLN 500 billion. At the end of Q2 2025, the number of active housing loans in Poland amounted to 2.176 million.

Higher demand for mortgages was driven by the slowdown in housing transaction price growth, rising wages, and the NBP’s interest rates cut on May 7, 2025. The first rate cut since October 2023, by 0.50 pp, lowered the reference rate from 5.75% to 5.25%, significantly boosting creditworthiness as reflected in the AMRON Centre’s Housing Availability Index. This predictable and long-awaited move by the Monetary Policy Council also improved consumer confidence indicators published by the Statistics Poland (BWUK, WWUK), which reached their highest levels since the start of the COVID-19 pandemic.

A significant increase in banks’ lending activity naturally led to a deterioration in two indicators of new loan portfolio quality. The share of loans with an LtV ratio above 80% rose slightly by 1.56 pp, reaching 28.25%. A worrying signal is also the extension of the maturity period for newly granted loans. Compared to the results noted in Q2 2024, the share of loans with maturities between 25 and 35 years increased by 4.5 pp.

Nevertheless, despite these warning signals regarding current lending activity, it is satisfying to note another decline in the share of non-performing loans in the total housing loan portfolio to 1.47%. This continues the downward trend observed since mid-2023. Although the quarterly change accounted for only 0.05 pp, the year-on-year decrease amounted to as much as one-quarter. At the same time, the share of non-performing CHF loans remained unchanged compared to the previous quarter (10.52% of the portfolio), but in comparison to the same period in 2024, a decrease of one-fifth was recorded.

During the analysed period, the slowdown in developers’ activity, observed since the beginning of the year, continued. Although in Q2 2025 developers completed over 29 thousand housing units, which was nearly 6% more than in the previous quarter and less than 1% in comparison to the same period last year, key indicators of current market condition showed significant declines. Developers started construction of nearly 32 thousand dwellings – less by 13% quarter-on-quarter and 18% year-on-year. At the same time, the number of construction permits issued, considered a reliable indicator of investment optimism, diminished to its lowest level in seven years, reaching 34 400 (by 17% less than in Q1 2025 and one-third less year-on-year).

At last, the long-awaited declines in average transaction prices have appeared on the housing market. Compared to Q1 2025, the average transaction price in Cracow dropped by as much as 2.73%, in Warsaw by 1.67%, and in Poznan by 1.27%. In other major cities, symbolic increases of less than 1% were recorded, with the exception of Gdansk, where prices rose by 1.18%.

On a year-on-year basis, all major markets recorded single-digit increases in the average transaction price per square meter of an apartment. The highest growth rates were recorded in Cracow (7.2%) and Gdansk (6.7%), while the lowest, just under 2%, was noted in Lodz. In Warsaw, the annual increase amounted to 3.36%, reaching PLN 14 757 per square meter. It is worth noting that just one quarter earlier, annual price growth rates in all monitored agglomerations exceeded 20%. This shows that the real estate market has also corrected the disruption caused by the ‘2% Safe Loan’ programme. In this context, the government’s clear stance on abandoning programmes that support potential homebuyers through loan subsidies deserves recognition.

In Q2 of this year, a predominance of rent increases was observed, with average quarterly growth between 1.5% and 2.5% was slightly higher compared to the previous quarter. However, on a year-on-year basis, rent increases did not exceed 5% with the exception of Gdansk and Lodz. The rental market in Lodz continued to lead with the highest annual increase in rents, reaching 8.48% in Q2 2025.

To summarize: after periods of high volatility in prices and rent rates, the market is stabilizing and becoming more accessible for buyers purchasing dwellings for their own needs, particularly as an alternative to renting. This trend is reinforced by the July decision of the Monetary Policy Council to cut NBP rates again, raising expectations of further reductions, which strengthens interest in real estate purchases supported by housing loan. The halt in price growth, and even visible corrections on some markets, combined with a diverse and relatively large supply, will support greater interest in residential purchases.

The total value of new housing loans in the first half of this year amounted to over PLN 45 billion, while the number amounted almost 104 thousand. This may signal a new record in lending volume. The banking sector’s best result so far was in 2021, when 256 thousand mortgages were granted for amount of PLN 85.8 billion. Of course, in terms of the number of loans granted, we cannot expect a record-breaking result this year, but it will certainly be significantly higher than a year ago, when nearly 203 thousand housing loans were issued.

The government reshuffle brought to light several promising government solutions for supporting the development of residential construction. Unfortunately, the proposed changes focus exclusively on supporting social housing, completely disregarding the aspirations of those ready to take on the effort of buying their own home with bank financing. Deputy Minister Tomasz Lewandowski, currently responsible for housing policy at the Ministry of Finance and Economy, recommended that those with the necessary resources and initiative should join housing cooperatives and pursue their housing plans “without bank margins and without developers.” As the Minister stated: “Such people should not be left on their own. They deserve state support.”

As the Polish Banks Association, we maintain our recommendation that state support should also extend to those willing to save long-term for housing purposes through building societies. This is a completely different group of citizens than those targeted by Minister Andrzej Domański’s Savings and Investment Account.

Meanwhile, on July 9, the Sejm amended the law on social and municipal housing, changing the financial framework for the entire housing sector and significantly increasing maximum spending limits on non-repayable grants through 2030 – covering up to 80% of construction costs in the municipal and social housing system. Subsidies are also proposed for preferential 30-year loans granted to Social Housing Associations (TBS), Social Housing Initiatives (SIM), and housing cooperatives.

In the context of such a significant increase in budget spending on the development of social housing, it’s necessary to organize the rules for managing social housing stock. First, privatization (purchase) of such apartments should be excluded. Periodic verification of tenants’ incomes in municipal and social housing should be introduced, with rents adjusted accordingly, even up to market levels. This should eliminate the currently informal but widespread practice of “inheriting” rights to social or municipal housing. An amendment to the Tenant Protection Act is necessary to finally balance the rights and obligations of both tenants and landlords, regardless of the market segment. There should be no tolerance for tenants who do not pay rent or even damage the premises they occupy. This is also an area for the social housing policy currently promoted by Deputy Minister Tomasz Lewandowski.

A new opening is also expected in the revival of housing cooperatives, which currently number 3 500 d enjoy a better public image than developers. The planned legislative changes are intended to, on one hand, “marketize” the management principles of housing cooperatives, and on the other, secure funding for cooperative housing projects. The draft changes include a non-repayable grant for cooperatives amounting to 15% for housing construction and a low-interest loan with a 2% annual rate and a repayment period extended to 50 years. This indeed could work.

Jacek Furga,Ph.D.
Head of AMRON Centre

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