Banks and SKOKs sent inquiries for home loans to the Credit Information Bureau (BIK) in November for an amount 65% lower than a year earlier, the bureau reported. The number of applications fell 63% year-on-year to 13,600, while the monthly figure was down 2.4%.
The average value of a home loan applied for in November this year was PLN 337.47 thousand, down 5.6% y/y, but down 0.3% compared to October 2022, it announced.
“The November reading of the BIK Housing Loan Demand Index confirms the stabilization of the Index value at a low level. November again saw a return to declines in the number of applicants, and in both y/y and m/m terms, with a slight increase in the average loan amount applied for. High interest rates, tighter regulatory requirements and fears of the effects of the economic downturn, effectively froze demand for home loans for a longer period of time. November’s Index value, despite not being the lowest, is still one of the lowest in the entire 14-year history of the measurement,” said BIK Group chief analyst Waldemar Rogowski.
The November value of the Index was negatively affected by 63% fewer applicants than a year ago. This is one of the lowest results since January 2007, which is 15 years since BIK has analyzed the number of applicants, he stressed.
“Still in play, therefore, is a rather negative scenario, in which the number of applicants falls. For demand to unfreeze, a significant increase in creditworthiness is needed, which depends on four factors: interest rates, wages, real estate prices and the cost of living. At this point, real estate prices are the most likely to fall, wages have been falling in real terms for several months, and interest rates are unlikely to be lowered anytime soon, as is inflation, which is unlikely to further increase the cost of living for households. In the case of real estate, however, I would not count on some spectacular reductions of 20-30%, which would significantly increase creditworthiness and thus stimulate demand for home loans,” Rogowski concluded.
Source: BIK and ISBnews
