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Creditworthiness 2024. Interest rates and salaries. Analysis

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As Poles' salaries increase, their creditworthiness to purchase a residential property increases. It has now reached a higher level than before the series of interest rate increases, HREIT analysts estimate.

HREIT analysts' calculations show that a three-person family with an income of two national averages can get a loan of PLN 707,000. zloty. This is an increase of nearly 80 percent compared to July 2022. At the same time, “some institutions estimated the creditworthiness of an example family at approximately PLN 720,000-750,000,” experts note.

The increase in creditworthiness, according to analysts, is caused by salary increases. Those in the corporate sector have increased by about one third from September 2021 to today, according to Central Statistical Office data. Which means that the average salary in enterprises has increased over the last 2.5 years from about PLN 4,000. PLN to over 5.5 thousand zlotys in hand. “Recently, the increase in wages has been crucial for the development of creditworthiness. Pre-election cuts in interest rates contributed much less to the observed changes,” HREIT analysts say.

Creditworthiness 2024HREIT

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Forecasts

In their opinion, this is not the end of the increase in Poles' creditworthiness. They emphasize that two premises will be of key importance: forecast of dynamic salary increases and predictions interest rate cuts. The March projection supports the first argument inflation prepared by NBP analysts, which shows that in the years 2024-26 wages in Poland are to increase by a total of over 27%. – emphasizes HREIT.

The threat to the above predictions will be a possible long-term decision of the Monetary Policy Council to leave interest rates at the current level or even their increase and new legal regulations – analysts say.

They add that, for example, the recent amendment to the Act on support for borrowers who have taken out a housing loan and are in a difficult financial situation and the Act on crowdfunding for business ventures and assistance to borrowers may result in a tightening of banks' lending policy. The aim is primarily to facilitate access to assistance from the Borrower Support Fund.

Inflation and interest ratesPAP

Interest rates in Poland

Interest rates remain at their current levels from October 2023. The main, reference NBP interest rate from October 5, 2023 is 5.75%. The level of other interest rates: lombard rate 6.25 percent, deposit rate 5.25 percent, bill of exchange rediscount rate 5.80 percent, bill of exchange discount rate 5.85 percent.

“The Monetary Policy Council began to tighten our monetary policy in October 2021. As a result of these changes, the basic interest rate, on which the interest on loans and deposits depends, increased from the symbolic level of 0.1% to 6.75% in September 2022 “The increases were quick and so severe that after a year we suddenly woke up with interest rates at the highest level since 2002,” wrote HREIT analysts.

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