Polish mortgage market thrives as housing booms

Photo: Getty Images/Christopher Furlong

Leading Polish banks are publishing their first quarter results which show that mortgages continue to be a very popular form of loan among debtors.

It appears that the first months of 2018 have been even better than already very successful 2017. According to recently published report banks noted a two-digit increase. After lean years following the financial crisis, mortgage popularity started to boom. The value of new contracts was 13 percent higher than 2016 and the number of a new contract by 6,85 percent.”

Both figures surpass the inflation rate of 1.5 percent in April, but the value of loans is going up partially because prices property prices are rising between 6 and 10 percent, depending on the region according to the Polish Real Estate Federation in its “Puls rynku” (market puls) report.

Most of the leading Polish banks such as ING Bank Śląski, Bank Pekao or Bank Zachodni WBK reported strong numbers in mortgage lending. ING Bank Śląski outdid its first quarter of 2017 result by 69 percent. Bank Zachodni WBK showed an increase of 22 percent compared to the same time in 2017.

A couple of the most active banks in the mortgage market have not yet published their quarterly reports. Soon we will find out the results of PKO BP, the leader in this field and BGŻ BNP Paribas.

According to bankier.pl banks’ the impressive performance and increasing sales cannot be credited only to the Polish government’s “Flats for the young” program, which was set up to help young families purchase the property by giving them a one-off subsidy towards a downpayment. The sum allocated to the program in 2018 is very similar to 2017, approximately 260 million PLN. This year is the last year of the program and borrowers cannot take out loans with payment in 2019 so the subsidies only boosted sales in January. According to property portal Rynekpierwotny.pl, however, more than 40 percent of purchases are for cash.

Experts emphasize that the demand for mortgages results from a stable market situation and good positive prognosis regarding unemployment and wage growth. Poles have more disposable income, therefore they are more willing to borrow. The financial situation looks more favourable.

Record-low interest rates also facilitate the boom, as they directly lead to low prices. However, this may and probably will change, therefore potential borrowers should take that into account when considering a mortgage.