Increase in cash loans as installment and mortgage lending declines in January

The Polish credit market saw a significant rise in cash loan activity at the start of the year, while mortgage and installment loans experienced sharp declines, according to data from the Credit Information Bureau (BIK).

In January 2025, banks and credit unions issued 27.2% more cash loans compared to the same period last year. The total value of these loans surged by 43.3% year-on-year, reaching PLN 9.257 billion, marking the highest recorded monthly value for cash loans. This increase was largely driven by high-value loans exceeding PLN 50,000, reflecting both consolidation of existing debts and increased consumer spending. The average cash loan granted in January stood at PLN 25,788, up 12.6% from the previous year.

Despite the rise in cash loans, installment loans saw a 24.2% drop in the number of loans issued, with the total value decreasing by 12.2% year-on-year. The decline was attributed to fewer small-value installment loans, particularly in deferred payment transactions. However, the average value of an installment loan increased by 15.8%, reaching PLN 1,979, due to a higher share of financing for more expensive goods and services.

The mortgage market also saw a sharp decline. The number of housing loans issued in January was 34.3% lower than in the same month last year, while the total value of new mortgage lending fell by 32.6% year-on-year and 10.2% month-on-month. However, experts note that the decline is largely due to the impact of the Safe Loan 2% program, which boosted lending figures in early 2024. Adjusting for that effect, mortgage lending would have shown a 78.2% increase year-on-year. The average value of a new mortgage loan in January was PLN 44,500, 2.6% higher than a year ago.

Loan repayment quality continued to improve, with all four key Bank Credit Quality Indices showing better results both month-over-month and year-over-year. Analysts attribute this to rising wages and stable interest rates. The mortgage loan quality index stood at 0.7%, while installment loans recorded 1.36%, indicating a low-risk lending environment.

While the credit market remains stable, analysts continue to monitor potential risks, particularly in mortgage lending, where future trends may depend on government support programs and interest rate adjustments.

Source: BIK