MonthJanuary 2020

Demand for housing loans is increasing

Despite the tightening of criteria, in the first quarter of 2016, there was a significant increase in demand for housing loans – according to the analysis of the Capital lender. Does this mean that the growing requirements will not stop the long-lasting bull market in the real estate market?

NBP research conducted in cooperation with 25 banks shows that in the period from January to March 2016, the criteria for granting housing loans were tightened. The increase in margins mainly concerned higher risk liabilities. Many banks also declared changes in the rules regarding additional collateral and raised the level of own contribution.

The tightening of margins was not a surprise for the industry. – Greater requirements of financial institutions introduced at the beginning of the year are completely understandable due to the entry into force of Recommendation S in the field of obligatory own contribution of 15% and the recommendation of the Polish Financial Supervision Authority regarding the assessment of creditworthiness – assesses Good Finance, Sales and Marketing Director at the Geo Development Group.

Good Finance fueled demand

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NBP analysis proves that the strict criteria did not surprise customers either. On the contrary, in the first quarter of the year, there was even an increase in demand for housing loans. In the banks’ opinion, this is primarily the effect of concerns related to the exhaustion of the funds from the “Apartment for the Young” program.

The economic situation of households or consumer spending, which usually determines the popularity of banking products, turned out to be almost insignificant in this period. – Let us remind you that in mid-March Fine Bank announced the suspension of accepting applications under Good Finance for 2016 – says Good Finance. – The reason for the decision was a total reservation of USD 715 million allocated for subsidies – he adds.

Where does the growing demand come from? USD did not completely close the road to Good Finance, enabling the submission of documents for 2017 and 2018. As a result, 5,000 new applications were submitted on the day of publication of the USD communiqué.

Thanks to this, the entire 2016 turned out to be record-breaking: over 27,000 applications, i.e. three times more than in the first year of the program. According to data from the end of April 2017 had more than 3,000 documents, using the limit in 12.02 percent, and in 2018 36 applications were submitted, reserving the limit is 0.12 percent.

The housing market boom continues

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The growing popularity of housing loans proves the constant interest of buyers and the smooth sale of the market offer. According to the analysis of the National Real Estate Market, the first quarter was characterized by a surprising sales dynamics of new premises.

This market situation is a simple way to maintain a bull market in the property market. From January to March, 17.7 percent were commissioned. more apartments than in the corresponding period of 2015 (data from the Central Statistical Office). Individual investors and developers had a significant share in the success.

The latter recorded the largest increase – they put into operation by 53.7 percent. more places than a year ago. – Greater activity of developers is associated with benefits for people looking for their own “M”. The offers are more diverse and better suited to the expectations of customers – emphasizes the Sales and Marketing Director of the Geo Group.

Buyers from Lower Silesia could count on a large variety. In the period analyzed by the Central Statistical Office, the largest, over 68% increase in the number of dwellings completed was recorded in the Lower Silesian Voivodship.

Optimistic forecast for the future

Optimistic forecast for the future

Higher requirements and, at the same time, growing demand for loans and flats is the balance sheet for the first quarter of 2016. How can the market change in the second half of the year?

Although banks declare to maintain their policy in this segment, everything seems to indicate that the second quarter will be equally intense. The reason can be even the season of the year – spring and summer are always associated with increased movement in real estate.

Do you have children? You may not get a loan!

As you can see, a larger number of children directly translates into a decrease in creditworthiness. The least noticeable change related to the size of the family took place in the case of USD loans. In this case, a family of five may have a debt of one-seventh lower than a childless marriage.

For loans in dollars and Swiss franc, this capacity decreased by around 40%. The reason for this is that, when calculating the amount for which the loan can be granted, the bank deducts from the income fixed costs that are associated with the daily functioning of the household.

The method of their estimation may differ depending on the institution

The number of people in the household allows, therefore, to estimate what the average financial surplus can be that could be used to pay off mortgage installments.

When applying for a mortgage, however, you must remember that in addition to the number of people in the household, the bank also pays attention to other factors.

Important information for financial institutions is the number of people working in a given household. In the event that only one of the spouses has a job, even despite sufficient income, the bank will be more cautious than if the income comes from two sources.

This is due to a simple calculation

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If the only source of income is lost, the family may have problems paying their debts regularly. The type of work performed by borrowers and the place of employment is also important. Budget employees cannot boast of high incomes, but in their case, the probability of sudden job loss is relatively low.

In the bank’s opinion, such a person may prove to be more reliable than a client with a higher, but irregular income. From the point of view of the maximum loan amount, the form of employment is also important.

Financial institutions have the most favorable attitude towards an indefinite employment contract, which is why it will be easiest for people employed in this way to take out a mortgage.

Before granting a loan

Before granting a loan

banks also try to analyze customer spending. To this end, a common requirement is to provide a bank statement for a specific period. On this basis, the financial institution assesses the ratio of monthly expenses to inflows and estimates the probability of payment gridlocks when paying off loan installments.

The level of assumed future costs of maintaining the purchased flat also affects creditworthiness. Just having a credit card works the same way, not to mention being late. The bank also checks whether the borrower acts as a guarantor for other people’s credit obligations.

In turn, the history of cooperation with the bank may have a positive effect on the creditworthiness of a potential borrower. Having a ROR account for many years, regular repayments of previously drawn loans will undoubtedly facilitate the credit decision of a financial institution.

New housing prices and loan spreads are rising

Generally, people with above-average incomes can count on a lower margin. Borrowers who have the resources for own contribution also have a chance for more favorable conditions. The higher the cost of credit, the lower it will be.

New apartments are competitively priced in comparison

New apartments are competitively priced in comparison

with premises from the secondary market. In addition, many promotions can be found in the developers’ offers. Bonuses are offered not only in the form of discounts, but also various types of promotional packages, including, for example, a free garage, kitchen furniture, or annual rent. Increasingly, the apartment can be bought with a finish.

Purchasing a finished flat is a great help for customers. That is why in our promotional program Family on the finished Alpha estate in Warsaw’s we offer a finish in the price of the flat. For example, a three-room, 55-meter turnkey flat is available for purchase at USD 6,820 / sq m. In our next investments, we will focus primarily on the quality of apartments and prepare finished premises, because such is the demand of our clients. Of course, buyers will have the opportunity to choose an apartment with or without finishing.

This district has recently received the palm of Wola’s priority. Białołęka is also in the top three capital districts with the largest development offer. However, only in Mokotów does the number of apartments on the primary market offer exceed 2 thousand. The number of flats is decreasing. As Emmerson reports, three months ago, over two thousand flats were available for purchase in at least three Warsaw districts.

Loans become more expensive

Loans become more expensive

At the moment, many people are buying flats who invest their savings in real estate. In addition, the purchase is also decided by people who want to escape the need to pay 5 percent of their own deposit for the new loan from the new year. 100% of many banks are lending the value of the flat. However, as analysts point out, banks are gradually increasing the margins and fees associated with granting mortgage loans.

To get attractive credit terms, reduce your margin and commission, use the promotional offer. This is due to the need to use additional financial products. By default, you need to set up an account that will be affected by your monthly salary and obtain a card. It is often required to take out life and unemployment insurance as well as investment products.

How to get a mortgage quickly?

Finding your dream home is not easy. The search often lasts a long time, in the end, we choose a place that we will call home for many years. Once we find the perfect apartment, it turns out that we are not the only ones interested in buying.

We sign a preliminary contract as soon as possible and then the race against time begins. Experts from the Association of Financial Consulting Companies tell you how to efficiently get through the credit procedure and get financial support for implementing your own M. plans.

A mortgage is usually taken for a high amount and for a long period

A mortgage is usually taken for a high amount and for a long period

Therefore, even in a hurry, it is worth spending time comparing the offers of individual institutions thoroughly. The wrong decision can translate into increased costs that we will incur for many years.

Of course, you have to consider the price of the loan, but not only. The offers also differ, e.g. by the required own contribution, the method of calculating the available loan amount or any additional products.

There are a lot of parameters, which means that it is impossible to indicate one offer that would be the best for everyone – notes Good Finance.

Well, the fact that a given institution offers cheap credit if we cannot get it because we do not have the bank required 20%. own contribution. Another offer may be slightly more expensive, but the bank will accept a contribution of only 10 percent.

Offer uneven offer

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The solution that will allow us to compare available offers and at the same time will significantly reduce the time that we will have to devote to this is the use of a financial advisor. He can conduct a preliminary analysis of our financial situation and select appropriate offers.

Thanks to this, we will avoid time-consuming and tedious bank visits. It is worth asking him to list all costs – both for the loan and any additional products so that it will be easier for us to make a decision. What’s more, the adviser will also help you at the later stage of obtaining financing, i.e. when applying for a loan.

How to get through the loan procedure?

How to get through the loan procedure?

Even if we have adequate creditworthiness and high savings, it may turn out that the process of obtaining a loan is prolonged. Whether we wait only a few weeks or a few months depends largely on ourselves. Usually, the decision is made after about a month.

During this time, the bank examines the information and documents contained in the loan application. Checks the sources and level of our income, current commitments and costs that we regularly incur. The property we purchase is also assessed, including its legal status and value.

During verification, it may turn out that some documents require supplementation or additional signature. Any such situation suspends the procedure and extends the waiting time for a decision. 

Therefore, if we care about time, we should prepare the loan application as accurately as possible. Specialist support in such a situation can be very helpful and will avoid any downtime. In extreme cases, errors or shortcomings can even result in a negative decision and the need to submit an application to another bank.