According to the latest data from the Polish Bank Association’s AMRON-SARFiN report, the number of new mortgage agreements dropped by a staggering 29.56% compared to the previous quarter, with the total value of these loans falling by 28.87%.
The Polish Bank Association (ZBP) identified several key factors contributing to the downturn in mortgage activity, with the primary reason apportioned to banks tightening their lending criteria, a move that has made it more challenging for borrowers to secure home loans.
This tightening has been a response to the rising economic risks, including rises in inflation and mounting concerns about financial stability. Additionally, the lack of clear government declarations regarding new subsidy programs for homebuyers has led to a "wait-and-see" approach among potential borrowers.
“The housing market is in a waiting phase, where potential buyers are considering whether to take advantage of the available mortgage offers, wait for the possible introduction of new support programs or the decrease in housing prices,” the ZBP reported.
This uncertainty has dampened demand, with many consumers preferring to wait for more favorable conditions rather than committing to a mortgage under the current stringent terms.
Recovery on housing construction
Despite the mortgage dip, construction activity saw a resurgence in 2024 with 60,078 new housing units being built in Q1 alone, a near 20% increase from the previous quarter. This contrasts with 2023, when 34,328 units were started in Q4, and has reflected a gradual recovery throughout the year.
Rising debt despite fewer mortgages
Meanwhile, the average value of a home loan in Q2 2024 rose to 423,336 zlotys (€98,891), an increase of 5,951 zlotys (€1,390) from the previous quarter. This suggests that while the number of new loans has decreased, those who are borrowing are taking out larger loans, possibly due to rising property prices or the need for higher loan amounts to meet stricter lending criteria.
The ZBP report revealed that a total of 2,279,387 housing loans are currently being repaid.
Looking forward, the mortgage market's trajectory will depend on the resolution of these economic challenges. Potential government interventions or changes in monetary policy could alter the current dynamics, but for now, the market remains subdued, with cautious optimism seemingly the order of the day.
