Banks and SKOKs granted 63.1% fewer housing loans y/y in numerical terms in January 2023, according to the Credit Information Bureau (BIK). In value terms, there was a 65.2% y/y decrease.
In January 2023, the average value of a home loan granted amounted to PLN 329.17 thousand, down 5.7% year-on-year, it said.
“The downward trend in home loan sales continued in January this year. Banks granted only 6,217 of them, the lowest figure in 13 years, or since January 2010. The monthly value of home loans in January 2023 amounted to PLN 2.047 billion – a reading that is among the lowest since January 2010. So what could change the situation in the home loan market? First, an increase in demand for home loans, and this requires, as I have written many times before, the combined occurrence of several phenomena. A reduction in interest rates, real wage growth, liberalization of supervisory requirements for calculating creditworthiness (here we already have the first swallow), and a drop in real estate prices (we are also already seeing some signs of price deceleration). Secondly, the willingness of banks to extend housing loans. Housing credit is the product with the lowest credit risk, but now with a very high legal risk. In a sense, housing credit is becoming like acquiring a financial option for consumers, rather than a binding financial contract, which may discourage banks from extending it en masse. We forecast the value of lending for the whole of 2023 at PLN 28 billion,” said BIK Chief Analyst Waldemar Rogowski commented.
The monthly reading of the Home Loan Portfolio Quality Index in January 2023 was 1.46%. Over the past 12 months (January 2022 to January 2023), the quality of the portfolio has deteriorated, as evidenced by an increase in the Index by (+0.91 percentage points).
“The value of the Home Loan Quality Index has been successively deteriorating (increase in the Index value) on a 1-, 3-, 6- and 12-month basis. The current Index reading is the highest since 2015. In 2022, I assumed that the negative effect of quality deterioration would be reduced by the widespread use of credit moratoria. However, the participation in credit moratoria has not been enough to fully curb the growth in the loss rate of PLN housing loans. Foreign currency loans cannot be abstracted from either. We see in the BIK database that the increase in claims is mostly related to loans granted in Swiss franc. In their case, a new type of risk – I called it legal – has weighed on the maintenance of quality. The reason for this phenomenon may be that customers are withholding repayment of their obligations pending legal settlements. The year 2023, in my opinion, will be crucial for the quality of the housing loan portfolio in the following years,” BIK Group’s chief analyst added.
Source: BIK Group and ISBnews
