The share of housing loans in foreign currency is decreasing from year to year – according to a study by the National Bank of Poland regarding the real estate market in Poland in the first quarter of 2016. What does this mean for the real estate industry?
According to Good Finance data, since 2012 the share of foreign currency loans has been steadily decreasing compared to all housing loans. Good Finance lists several key factors that contributed to this decline.
First, banks have stopped providing support to people who do not receive a regular salary in a given currency. It is also the effect of regular depreciation, earlier repayments, and refinancing.
The dollar is still attractive
Lower demand for currency housing loans confirms the greater financial stability of Polish households – assesses Marek Szmolke, president of the PB START development company. – At the same time, it is more favorable to the macroeconomic situation of the entire country – he adds.
This does not mean, however, that this type of financing for the purchase of real estate is not common. Banks still grant loans in foreign currency for housing purposes, with the difference that their quality is much higher than years ago. As a result, the share of non-performing loans at the end of the first quarter of 2016 was only 3.2 percent.
Lower interest in currency financial products does not mean, however, a decrease in Poles’ credit activity. It is still one of the most popular ways to finance housing investments. In the first months of this year, loans worth USD 9.7 billion were granted, according to Good Finance.
It is true that this means a decrease compared to the fourth quarter of 2015, but the high value of new loans disbursed at that time was mainly due to regulatory changes (increase in the minimum own contribution, exhaustion of funds from MdM).
It is also worth noting that loans in USD are also so popular due to their high quality – at the end of the first quarter of 2016, the share of non-performing loans remained at 2.7%.
Good time for investment
Looking at the credit situation from the first half of the year, it can be expected that the following months will be equally stable and beneficial for buyers – emphasizes the president of PB Start. The declining level of non-performing loans in conjunction with the ongoing work on a systematic solution to the housing loan currency issue will certainly improve the comfort of future borrowers.
New transactions will also be supported by a balanced situation on the real estate market. The return on housing investments (especially short-term ones) has been rising since the beginning of 2016. According to Good Finance, they are more profitable than e.g. 10-year treasury bonds.
The increasing availability of sq m for average remuneration is also estimated. This is definitely a good time to think about investing in your own “M” or buying premises for rent.