In the third quarter, banks eased the terms of granting mortgage loans a bit, but mainly those that had previously drastically increased the required own contribution. However, credit spreads continue to rise, although this effect is temporarily offset by record low interest rates.
Are you planning to buy an apartment? There are changes in loans
/123RF/PICSEL
In the third quarter of 2020, banks eased the standards of granting housing loans. They changed some of the terms of granting loans, because they lowered the amount of the required own contribution of borrowers, but at the same time raised loan spreads and margins for higher-risk loans – according to the latest NBP report on banks’ lending policy.
However, this does not mean a significant loosening, because the change regarding own contribution mainly boils down to the fact that individual banks, which after the outbreak of the pandemic drastically increased the requirement of own contribution up to 30%, reversed their earlier decisions.
This was the case at ING Bank Śląski and BOŚ Bank, which, after an earlier increase, returned to the requirement of a 20% own contribution.
The minimum required own contribution is one of the biggest barriers to access to a mortgage loan, the more so as housing prices are not yet significantly falling, although the outbreak of the pandemic stopped the several-year-long trend of continuous growth in this market, which, according to some experts, was already a price bubble.
– Despite the tightening of this condition of own contribution after the outbreak of the pandemic, there are still few banks that will grant a loan with 10% the value of the real estate purchased, but it is subject to additional conditions, i.e. it is only possible for a certain group of real estate, for example, buying an apartment in the city, but it will be more difficult to get such a loan to buy a house. Some banks will grant such a loan only to their own customers, but not to external customers – explains Jarosław Sadowski, Expander’s chief analyst.
Both the NBP research and Expander data confirm the increase in credit spreads, i.e. the interest rate component.
With a loan of 10% contribution for 300 thousand PLN in January the margin was 2.51 percent, and in October it was 3.12 percent. Of course, now high margins are offset by very low interest rates. The interest rate on such loans fell, because in January it was 4.24 percent, and now 3.35 percent. It must be remembered that margins are a fixed component of the interest rate.
Banks also eased, at least partially, the previously tightened conditions regarding the approval of sources of income, e.g. with regard to running a business or employment in industries at risk, but this happened in August and September, even before the second wave of the pandemic intensified.
The NBP survey shows that in the fourth quarter, banks expect a further, though slight, easing of lending policy and a continuation of the growth in demand for housing loans.
Monika Krześniak-Sajewicz
–
