BIK: The value of housing loans granted in February fell 61.4% y/y

Banks and SKOKs granted 59.4% less y/y housing loans by number in February 2023, the Credit Information Bureau (BIK) reported. In value terms, there was a 61.4% y/y decrease.

In February 2023, the average value of a home loan granted was 331.72 thousand zlotys, down -4.5% year-on-year.

"In numerical terms, the result was very weak, as banks granted only 6,778 loans. In value terms, banks granted housing loans worth PLN 2.248 billion in February. Compared to February 2021, this is 63% lower in value. So what can change the situation in the housing 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, a real increase in wages, liberalization of supervisory requirements for calculating creditworthiness (here we already have the first swallow), a drop in real estate prices (we are also already seeing some signs of price deceleration)," said BIK chief analyst Waldemar Rogowski.

"A limiting factor for demand in the coming months may be the anticipation of the launch of the government's 2% loan program. Secondly, it requires the willingness of banks to extend home loans. Although housing credit is still the product with the lowest credit risk, but now with huge risks and even legal uncertainty. In some sense, housing credit has ceased to be a financial contract whose provisions are not challenged by either party," he added.

The monthly reading of the Home Loan Portfolio Quality Index in February 2023 was 1.62%. Over the past 12 months (from February 2022 to February 2023), the quality of the portfolio has deteriorated, as evidenced by an increase in the Index of (+1.00 p.p.).

"Although the current Index reading is better than the one from a month ago (an improvement of -0.02 p.p.), the value of the Home Loan Index has been successively deteriorating (an increase in the Index value) on a 3-, 6- and 12-month basis. In 2022, I assumed that the negative effect of deterioration would be reduced by the widespread use of credit moratoria. However, participation in credit moratoria has not been enough to fully curb the growth of gold residential loan losses. The deterioration in the quality of foreign currency loans, most of which are in the Swiss franc, cannot be ignored either. The reason for this phenomenon is that customers are withholding repayment of their obligations pending legal settlements. The year 2023, in my opinion, will be very important for the quality of the housing loan portfolio in the following years," the chief analyst stressed.

Source: BIK and ISBnews