It can be said that the second quarter of 2019 on the mortgage market was extremely successful. Usually, spring months are better in terms of the volume of new loan agreements since the first quarter, but the analyzed period was record-breaking – the value of lending exceeded USD 16 billion.
In the second quarter of 2019, contrary to market expectations, most banks increased their pricing terms for mortgage loans. We are observing a slight increase in loan spreads and banks are increasingly promoting clients using additional banking products, the so-called cross-sell.
The novelty on the market is also the dependence of the margin amount
On the location of the property constituting the loan collateral, which Good Finance introduced. The most noticeable increase in margins concerns loans with the lowest 10% own contribution. For loans with 20% or more, the price terms are an almost identical quarter to quarter.
Observations from agencies show that investment clients are slowly starting to leave the credit market. They credited the purchase of a real estate for rent with minimal down payment. This is mainly due to the current price conditions of mortgage loans and the rising cost of purchasing real estate. The installment of such a loan begins to exceed the rental income.
Inflation remains moderate despite a clear rise in prices. However, we can touch the inflation target in the near future, which may cause an increase in interest rates. For now, borrowers can still enjoy the low-interest rates on their loans and the unchanged amount of their loan installments.
Slightly lower creditworthiness
Compared to the first quarter of 2019, the average creditworthiness calculated for the sample family in the 2 + 2 model and for the couple slightly decreased.
In both cases, it is USD 7,000, which has a negligible impact on changes in borrowers’ purchasing decisions. However, in the case of single loan worthiness has already decreased by USD 23,000.
With a monthly household income of 8,000 net USD, the 2 + 2 family will receive a maximum of USD 623 thousand from the bank USD. loan, and the couple 778 thousand. USD. In the case of a single earning 5,000 USD, creditworthiness will amount to 473 thousand. USD.
Mortgage – increasing installments
When buying a flat, be prepared to pay slightly higher installments than in Q1 2019. With a flat for 300,000 USD, the monthly loan installment will be 1301 USD. When the price of the apartment is 500,000 USD monthly loan cost is USD 2,169 (a loan for 30 years, own contribution of 10%).
Of course, the calculations are based on average values. At the same time, however, they give an idea of the level of costs to be prepared for when buying a flat at a certain price.
Average Mortgage Value
In Warsaw, 65 percent Mortgage loans granted through Good Credit experts are in the range of 200-400 thousand. USD, although in the capital we most often applied for amounts from 200 to 300 thousand. USD (41 percent). There are no dominant ranges in the basket of the five largest metropolises.
Most borrowers from these cities report interest in loans from 200,000 to 400,000. USD. An interesting fact is the relatively high percentage of loans between 400 and 500 thousand. USD (14 percent). In other locations 60% of loans in the range of 100-300 thousand USD.
Amount of loans granted
Interesting observations are brought about by the analysis of the average amount of mortgage loans granted through Good Credit. In the second quarter of 2019 in Warsaw, the average dropped to a very low level of 221 thousand. USD, while a year ago real estate buyers in Warsaw were indebted at an average level of USD 391,000. USD.
The explanation for this situation is the high share of its own contribution in taking the loan, particularly significant for Warsaw. There is the most cash traded on the real estate market. In the basket of the largest Polish cities, the average new mortgage is close to 300,000. USD, and in other cities slightly exceeds 250 thousand. USD.