Poland Would a reduction in interest rates and a drop in mortgage rates boost sales?

Would a reduction in interest rates and a fall in mortgage rates revive housing sales? How much of an impetus to purchase would cheaper standard loans without the Start-up Loan be? Could lower interest rates drive up housing sales

Zbigniew Juroszek, CEO of Atal:
There is no doubt that the high level of interest rates has a strong and negative impact on the situation in the real estate market. At present, mortgages in Poland are among the most expensive in Europe - the average interest rate on new commitments fluctuates around 8 per cent. This strongly reduces the demand for flats and the creditworthiness of buyers. Their situation is improved by the relatively high dynamics of wage growth, which, on the other hand, raises production costs, not without influence on the growth of housing prices.
The banks' offer, with its high margins and predominance of fixed-interest products, does not encourage purchases either. Customers admit that as soon as there is an opportunity in the future to refinance a loan, move to a lower interest rate and fit into the cycle of rate reductions, they will gladly take advantage of such an option.

A gradual reduction of mortgage interest rates in Poland would make the discussion about state subsidies less relevant. This is because a standard offer would allow many families to realise their housing plans who, without subsidies, cannot now afford to take out a loan commitment. Also, given the proposed design of the subsidy scheme with its many restrictions, a rate cut would naturally exclude some potential beneficiaries.

Tomasz Kaleta, managing director of sales and marketing at Develia:
A reduction in interest rates and a drop in mortgage interest rates would certainly have a positive impact on the revival of housing sales, especially among customers who are currently hesitant to make a purchase decision. Lower interest rates could also indirectly influence the decisions of cash buyers for investment purposes. With interest rates on deposits and other low-risk financial instruments falling, investors are looking for alternative ways to invest capital, and real estate is often seen as a stable and attractive long-term investment.

In turn, lower interest rates on standard mortgages, without the support of the Start-up Loan scheme, could become a significant driver of demand. For many customers who do not qualify for government programmes, a cheaper loan could be a real incentive to decide to buy a home.

Agata Zambrzycka, sales and marketing director at Aurec Home:
Creditworthiness is definitely better than it was two years ago, but due to high interest rates, people earning the minimum wage still have to postpone the dream of buying their own property. Small interest rate cuts will not radically change this situation. Even a 1.75 pp drop in interest rates will not bring about a revolution in loan instalments. For example, for a 25-year loan of PLN 500,000, the instalment with a margin of 2.3 pp (the average for loans with variable interest rates) will drop from the current PLN 3,900 to around PLN 3,350. This is quite a difference, but borrowers in 2020-2021 were paying around PLN 2250 per month with the same terms.
It is worth noting that in the last three years, most of the newly granted loans had periodically fixed interest rates, so the rate cut will not affect the instalments of these commitments. In order to restore balance in the real estate market, long-term measures are needed, such as releasing land owned by state-owned companies for new development investments or streamlining administrative procedures.

Magdalena Gosk, Sales Leader BPI Real Estate Poland:
For many customers, cheaper credit is a key argument in the decision-making process of buying a property. Especially now, when the market is experiencing a prolonged decision-making process. The reduction in interest rates and the drop in mortgage interest rates is always an additional impulse for the revival of housing sales. Cheaper loans increase the creditworthiness of buyers by lowering monthly instalments, which could encourage people who, for financial reasons at least, have so far held back their decision to buy.

In the case of standard loans, on the other hand, without support programmes, a lower interest rate would be an important factor influencing the purchase decision. Most customers are looking for attractive financing terms. Cheaper loans would make the standard offer more competitive and could attract new buyers who previously did not qualify for more expensive loans.

Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at Robyg Group:
We see positive trends in the market - lower inflation, funds from the EU and a stabilised economy allow us to assume that demand for flats will grow. Unfortunately, the supply is still low, there is a shortage of flats, especially in Warsaw, where the interest in purchase is the highest. This is the result of administrative procedures that are too slow and need to be definitely accelerated. Access to attractive housing finance for Poles is very important, but regardless of government programmes, we see that banks are preparing more and more interesting credit offers. Therefore, we are confident that the housing market will continue to grow and that the reduction of interest rates will have a slight impact on this growth.

Zuzanna Należyta, commercial director at Eco Classic:
At the moment, we are facing limited demand due to high interest rates. Many people simply do not have the opportunity to purchase a flat. The introduction of the programme in the announced form would certainly help especially those purchasing flats for their own needs. We estimate that the restrictions on the BK2% programme and the large supply will result in an upturn, but will not contribute to an increase in prices.

Marcin Michalec, CEO of Okam Capital:
A reduction in interest rates and thus an increase in creditworthiness would certainly allow some potential buyers to purchase flats. This, however, according to expert forecasts, may realistically happen only in 2025. At the same time, lower mortgage instalments could also encourage more people to purchase premises for investment purposes. Either of these forms, whether we are talking about government programmes of preferential loans for the first flat or cheaper mortgages - could have a positive impact on the recovery of the market.

Andrzej Gutowski, Sales Director of Ronson Development:
A reduction in interest rates and a drop in mortgage interest rates would certainly revive sales in the property market. The development market, including investment purchases, is strongly dependent on the level of interest rates. The years 2020 and 2021, when rates were at record lows, saw a lot of movement in real estate.
Even the mere announcement of a possible interest rate cut has a psychological impact. It can prompt buyers to make a decision. Cheaper loans, even without a ‘Start-up Loan,’ could become a significant impetus to buy for many potential customers.

Damian Tomasik, CEO of Alter Investment:
Currently, we have the most expensive loans in Europe and therefore, a reduction in interest rates and a decrease in mortgage interest rates would certainly boost sales. Mortgage loans are a key instrument for financing the purchase of real estate, and their preferential forms can significantly reduce the barrier to entry for many potential buyers.

Lower lending rates, without additional support programmes, could be a strong incentive, especially for those who were planning to buy but were holding back their decision in the face of high financing costs. It is worth noting that every percentage point, or even fraction thereof, of a reduction in mortgage interest rates significantly reduces the total cost of the loan in the long term, making the purchase of a property more attractive and cost-effective.

Source: dompress.pl
Photo: ROBYG, Royal Residence