Banks and SKOKs sent inquiries for home loans to the Credit Information Bureau (BIK) in December for an amount 60.7% lower than a year earlier, the bureau reported. The number of applications fell by about 63% year-on-year to 12,300, while the monthly figure was down 9.6%.
The average value of a home loan applied for in December 2022 was PLN 337.47 thousand, down 5.6% y/y, but down 0.3% compared to November 2022, it announced.
“The December reading of the BIK Housing Loan Demand Index confirms the stabilization of the Index value at a negative level of approx. -60%. Due to the base effect, comparisons to the lower values of 2022, the value of the Index itself may begin to rise, you can already see this effect from September 2022. However, in December 2022, we again returned to declines in the number of applicants, and in both y/y and m/m terms, with a slight increase in the average amount of credit applied for. Still high interest rates, tighter regulatory requirements and fears of the effects of the economic slowdown are limiting demand for home loans,” said BIK Group chief analyst Waldemar Rogowski.
The December value of the Index was negatively affected by a 63% lower number of applicants than a year ago. This is one of the lowest results since January 2007, which is 16 years since BIK has analyzed the number of people applying for a home loan. So the negative scenario, with a small number of loan applicants, is still valid, the analyst stressed.
“For the trend to change, a significant increase in creditworthiness, which depends on four factors: interest rates, wages, real estate prices and the cost of living, is necessary. At this point, real estate prices are most likely to fall, while wages have been falling in real terms since the summer of 2022, interest rates are unlikely to be lowered in the coming year, and the cost of living for households, even with a drop in inflation, will only rise less. Reductions in real estate prices in both the primary and secondary markets are possible in the coming quarters, but they will not be significant enough to significantly increase demand for housing loans in the following quarters,” Rogowski concluded.
Source: BIK and ISBnews
