Will 2013 be unlucky for the mortgage market?

The coming year will bring new solutions on the mortgage market. The Polish Financial Supervision Authority has recently announced changes in recommendations, but this time the institution will aim to relax the current regulations.

A draft of the new T Recommendation was presented

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According to which supervision will not arbitrarily impose limits of 50 and 65 percent, but each bank is to independently determine the acceptable level of net income burden by installment. The new proposed Recommendation also allows for the possibility of granting low loans based on a statement, without detailed verification of income. Contrary to announcements, we did not see a new Recommendation S. It is also intended to liberalize the lending policy on the mortgage market, but its presentation and implementation is prolonged. Let’s hope that in the new 2013 we will learn more proposals and new rules will come into force soon.

Changes in recommendations should bring a partial improvement in creditworthiness, and new potential borrowers will be the most satisfied with the new law. Positive changes are also waiting for people who already repay their loans in PLN. The reduction of NBP interest rates in November and December and the announcement of further cuts at subsequent meetings of the Monetary Policy Council resulted in lower Wibór, which determines the total interest rate on loans.

Since July 2012

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The 3-month rate has fallen by more than 0.90 percentage point and it should be expected that in the coming weeks Wibor will record even lower levels. The coming year should not, however, bring changes in the currency structure of newly granted loans. The dominance of the zloty observed in 2012 will certainly continue in 2013, and a foreign currency loan will be available only to the highest earners. Although the majority of clients will incur liabilities in PLN, one should not expect a decrease in loan margins. The growing risk of banks, resulting e.g. from slower development of the economy or uncertain situation on the labor market, will not encourage increased competition and offering cheaper loans. Margins in 2013 will remain at a level similar to the current year. In the case of PLN loans, they will be between 1.50 and 2.00 percentage points. Also, margins are not expected to decrease for loans in euros. Of course, periodic promotions and related reductions cannot be excluded, but it will definitely not be a trend that will affect the entire market.

A new support program 

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Should also come into force in the coming year. It is to replace the family on its own, and the expected date of entry into force is July 1. It will be a program covering only flats from the primary market and the group of beneficiaries will remain the same as in RNS. The main difference will be the method of payment of the subsidy. There will be no interest subsidy spread over 8 years, but the support will be one-off. Marriages and singles will be able to receive 10 percent of the replacement value of the property, and if there is a child in the family, this amount will be increased by another 5 percent.

The next 5 percent of the marriage will be able to receive if, within 5 years of granting the loan, the family increases by 3 or another child. Thus, the total additional payment may amount to even 20 percent of the flat’s value and this will mean the need to take a lower loan and pay lower installments. It is also worth noting that only people purchasing the first property will be eligible for support in the Flat for the Young program. It is a bit different than in Family on its own, where this criterion applied only to singles. However, the temporary gap between RNS and MDM can be a challenge for some developers. In the period before the new program enters into force, customers who meet the requirements will delay the decision to buy the property so that they can benefit from the subsidies. For this reason, among others, in the period before the entry into force of MDM one should expect a decline in demand in a part of the primary market.