Loan installments and creditworthiness – how much will they be? HRE Investments analysis

As a result of the recent interest rate increases, the average PLN housing loan installment has increased or will increase by about PLN 140. On the other hand, with more expensive loans, the creditworthiness fell – by an average of about PLN 100,000 – writes Bartosz Turek, chief analyst at HRE Investments, in the analysis.

“If we take into account all zloty housing loans that our countrymen have, it turns out that the average housing debt is around 190,000 zlotys, and there are 18 years to pay it back. Still in September – before interest rate increases – an installment of such debt it amounted to about PLN 1125 per month. Today the installment can be estimated at PLN 1266, or PLN 141 more “- wrote the Turk in the analysis.

He added that not all borrowers in Poland have yet been affected by the interest rate hike, as banks update interest rates on their debts with a certain delay and the adjustment to new market conditions may take even several months.

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Potential changes in loan installmentsHRE Investments

Increase in loan installments

Turek pointed out that hardly anyone is the owner of an average housing loan, “just like not many people earn, for example, the so-called national average”. The expert cited one more example.

“A person who just got into debt for 25 years and 300 thousand zlotys and in September enjoyed an interest rate of 2.85 percent. Any moment the terms of repayment of this debt will clearly change, because the interest rate may increase to about 4.3 percent. The initial installment of such a debt can be estimated at a little less than PLN 1.4 thousand. After taking into account the interest rate increases by the bank, the installment will increase to about PLN 1635 “- he calculated.

Creditworthiness

According to the Turk, the rising costs of credit directly translate into a decrease in the creditworthiness of his countrymen. “Let us consider a specific example of a family of three, in which two people work and each brings home at the national average. In September, such a family could have borrowed 700,000 zlotys. Today, its creditworthiness is about 100,000 zlotys lower and it should hover around 600,000 “- wrote the analyst.

He added that the consequences of interest rate hikes are already visible in the banks’ offers. “Unfortunately, not all institutions have already taken these changes into account when filling in our latest questionnaire. Those who managed to do so admit that the decline in creditworthiness over the last two months amounted to over a dozen percent” – he said.

Median creditworthiness of a family of threeHRE Investments

Possible increase in installments

According to an analyst from HRE Investments, it cannot be said that this is the end of interest rate increases. “If you listen carefully to the statements of the NBP governor, you can conclude that the worst is behind us, so perhaps we will not even need further rate hikes. The market players are of a different opinion. the next MPC meeting (at the beginning of December) the rates will go up again, significantly – even by about 0.5-1 percentage point. ” – he wrote.

He added that long-term forecasts show that installments may increase by as much as 15-20 percent until 2023. “This is the most likely scenario from today’s perspective, although you have to be aware that it can clearly change under the influence of the data flowing in on an ongoing basis” – said Turek.

“It is a slight consolation that usually in the period of higher interest rates, banks finally decide to fight more fiercely for customers’ favor and reduce margins. For now, we can only keep our fingers crossed for such changes in the future. Banks do not complain about the lack of customers.” – wrote the analyst.

He added that “the peak of demand for loans was in May” and “then banks received 2,500 loan applications per business day”. “Data from BIK suggest that in October, banks received less than 1.9 thousand applications per day” – he said.

Creditworthiness of a family of threeHRE Investments

Interest rates

In early November The Monetary Policy Council raised the NBP interest rates on Wednesday. According to the statement of the central bank, the reference rate was raised by 75 basis points to 1.25 percent.

NBP reference ratePAP / Adam Ziemienowicz

Main photo source: Shutterstock

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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