For a housing loan in January this year. a total of 28.03 thous. potential borrowers, compared to 37.82 thousand. a year earlier, which means a decrease by 25.9%, the Credit Information Bureau (BIK) reported. Average value of the requested loan in January this year. was 355.4 thousand. PLN and was higher by 11.1% y / y.
The value of BIK Index – Demand for Housing Loans (BIK Index – PKM) fell to 21.1% in January this year. This means that in January, as per business day, banks and credit unions sent inquiries to BIK for housing loans for an amount lower by 21.1% y / y. The first reading of the Index this year is close to the lowest readings in the pandemic in April (-28.1%) and May 2020 (-24.4%), it said.
“The January value of the Index was negatively affected by a very large drop in the number of applicants. The January number of applicants is the fifth lowest monthly result since January 2007. The number of people applying for a housing loan in January 2022 is at the same level as in April 2020, that is, the month of the greatest panic related to the COVID-19 pandemic.However, if we compare the number of people applying for loans in January 2022 to the number of people applying for loans in March 2021 (a record result in the entire pandemic), the decrease is as much as 28 771 people (over 50 %),” said the chief analyst of BIK Waldemar Rogowski.
He added that the decline in the number of applicants for home loans is not something new. From April 2021, in m / m terms, we have recorded a decrease in the number of applicants. This phenomenon may be even more aggravated in 2022 as a result of further increases in interest rates, an increase in the cost of living and the possible failure to mitigate these negative aspects with an increase in income.
“What partially limited the negative impact of the decline of people applying for a loan on the value of the Index is the average amount of the loan applied for, which in January 2022 is higher than the amount from January 2021 by PLN 38,432 (12.1%). However, also in the case of the average amount of the requested loan, we have a change, because the average amount in terms of m / m has been growing almost continuously (except for January 2021) for 18 months, i.e. from June 2020. However, this good streak in January 2022 was interrupted This may be the effect of a low base from January this year. Comparing with the value of applications in December 2021, the average value of the loan applied for in January 2022 was slightly, but it decreased – it is 1.1% lower,” Rogowski also pointed out.
The negative scenario described above is materializing, in which the decreasing number of people applying for a loan is accompanied by a decrease in the average amount of the loan applied for. The scale of the decrease in the average amount will be directly determined by the price situation on the real estate market, as well as the situation on the labor market and monetary policy.
“In an extremely unfavorable scenario, when the value of demand drops significantly, real estate prices, especially in less attractive locations, may even fall. Another factor that will shape the demand for housing loans is creditworthiness. In this case, the key factor will be the level of income growth. of households will limit the negative impact on the amount of creditworthiness of the increase in interest rates and the increase in the cost of living. Believing the market expectations, the rates should rise to 4.5-5%, however, based on the recent comments of the NBP governor, we can even assume their increase to 6%. If the increase in net income of households is small or in the case of a decrease in net income, then in an extremely negative case a large, strongly felt decrease in creditworthiness can be assumed,” said Rogowski.
Due to the fact that applications for a housing loan with a value of over PLN 1 million have already become something natural, and not an anomaly distorting the value of the index, starting from 2022, from the index reading in January, we decided to postpone the restriction, and therefore there are exclusions from the calculations of inquiries about housing loans exceeding PLN 10 million. Given the limitation to PLN 1 million, on which the Index was calculated so far, the January reading would be (-23.6%).
The BIK Index – PKM is calculated per business day, excluding inquiries about housing loans for amounts exceeding PLN 1 million and inquiries about the same client in the next 90 days. The index methodology was developed by the Credit Information Bureau in cooperation with the Institute for Economic Development of the Warsaw School of Economics. The index is published monthly.
Source: BIK and ISBnews
