Banks and SKOKs sent inquiries for home loans to the Credit Information Bureau (BIK) in March for an amount 57.6% lower than a year earlier, the bureau reported. The number of applications fell by about 58.4% year-on-year to 22,23,000, while on a monthly basis, it rose by 16.8%.
The average value of a home loan applied for in March this year was PLN 372.89 thousand, up 2% y/y. Compared to February 2023, it was 3.7% higher, it was reported.
“The March reading of the BIK Housing Loan Demand Index confirms the phenomenon already observed throughout last year of a very strong reduction in demand for housing loans. However, in interpreting this year’s March result, the specifics of the situation in March 2022 should also be taken into account. At that time we had a surge in demand for home loans in response to the announcement of a 2.5 percentage point increase in the interest rate buffer, introduced in April 2022,” said BIK Group chief analyst Waldemar Rogowski commented.
Therefore, the current March reading of the BIK Index shows not so much an actual decrease in the level of demand, but a statistical effect – a high base following last year’s market reaction to the expected increase in the buffer, he added.
“In the following months of 2022, demand for home loans continued to decline, creating a low base for comparisons in 2023. It is the statistical effect of the low 2022 base that may cause the Index value to rise in the following months of this year. It is worth noting that a symptom of a sustained improvement in sentiment toward home loans will only be a positive Index reading, confirming that inquiries were made in a given month for a higher amount than in the corresponding month of the previous year,” the chief analyst pointed out.
According to him, it is mainly worth tracking the behavior of the two components of the Index, i.e. the number of applicants and the average amount of credit requested. The lowering of the interest rate buffer requirements has resulted in an increase in creditworthiness, which can be seen in the growth of the average amount of credit applied for, which increased by 3.7% compared to February 2023 and is an all-time high.
“In my opinion, in the current market situation, the indicator that best shows the current situation of demand for home loans is the number of people applying for a home loan. In this aspect, March this year brought an increase in the number of applicants in relation to both February (16.8%) and January (67.6%). We haven’t seen such a large number of people applying for a home loan in 10 months,” Rogowski stressed.
“To sum up, two opposing phenomena are currently affecting demand for home loans: an increase in creditworthiness (a positive factor) and a possible refraining from taking out a loan until the launch of the government program to support the purchase of apartments on credit with an interest rate of 2% (a negative factor), as some people may refrain from purchasing decisions and reaching for credit until the program is launched. On the other hand, once the program is launched, it may be another of the factors positively influencing the growth of demand for housing loans. Thus, the situation will be very dynamic in the coming months,” The chief analyst concluded.
Source: BIK and ISBNews
