Start-up loan. The government is in a frenzy about a new program. “It could lead to an even bigger crisis”

The Ministry of Family, Labor and Social Policy assessed that the Start-up Credit program, instead of improving the availability of apartments, may lead to even greater problems for customers on the market.

“Unfortunately, I express my concerns that the solutions proposed in the act, instead of contributing to improving the availability of apartments, may lead to an even greater crisis on the housing market. A further increase in property prices, which is a probable effect of the proposed regulations, will result in even lower availability of apartments on the real estate market due to the need for consumers to obtain greater creditworthiness. The main beneficiary of the proposed solutions will therefore be developers, who have already benefited to a large extent from the previous solutions,” the MRPiPS wrote in a letter.

“Without denying the very idea behind the proposed solutions, the experience gained so far with previous instruments based on the mechanism of subsidies to loan installments allows us to doubt their effectiveness,” it added.

Numerous reservations to the draft law on the Start-up Loan, authored by the Ministry of Development, were previously presented by the ministries of finance, funds, climate, justice, as well as the National Bank of Poland.

Read also: The Ministry of Finance evaluates the Start-up Loan program >>>

On Wednesday, the Minister of Finance, Andrzej Domański, announced that the Start-up Loan programme would be the subject of discussion at one of the upcoming meetings of the Economic Committee of the Council of Ministers (KERM).

– As for the Start-up Loan, at one of the upcoming meetings of the Economic Committee of the Council of Ministers, Mr. Krzysztof Paszyk, Minister of Development, will present both this program and other solutions in the area of ​​increasing the availability of housing. For me, it is very, very important that, while remembering the demand side, we also do not forget about the supply side. In order for housing to be cheaper in Poland, more of it must simply be built. And I know from my earlier conversations with Minister Paszyk that his thinking is similar – said the head of the Ministry of Finance on Wednesday on Radio Zet.

When asked about the high cost of credit, Domański pointed out that it is primarily determined by the amount interest rateswhich is set by the Monetary Policy Council, and the Ministry of Finance has no influence on the decision of this body.

– This is an independent body. The National Bank of Poland is independent. For me, this independence is very important – said the head of the ministry. – We see that these interest rates are high compared to other European countries – he added.

Three weeks ago, the Government Legislation Centre website announced that the draft law on the Start-up Loan had been submitted to the Standing Committee of the Council of Ministers.

The start-up loan is to be granted for a period of at least 15 years, with a fixed interest rate set for a period of 60 months.

The amount of the subsidy for the installments will depend on the number of children in the family. Childless people will receive a subsidy for installments with an interest rate of 1.5%. Families with one child – 1%, with two children – 0.5%, and with three or more – 0%.

The project also adopted amounts defining the maximum basis for calculating subsidies for instalments, taking into account the number of children: PLN 200,000 for a 1-person household, PLN 400,000 for a 2-person household, PLN 450,000 for a 3-person household, PLN 500,000 for a 4-person household and PLN 600,000 for a 5-person household.

The project shows that the cost of subsidies for housing loans next year will amount to over PLN 1.15 billion, and over 10 years it will total almost PLN 19.4 billion.

In 2024-2025, a total of approximately 100,000 loans are to be granted, assuming that the average loan amount – in each year of the program implementation – is PLN 410,000.

In order to reduce the risk of cumulative demand for loans, the act provides for “solutions ensuring an even distribution of market demand and relative continuity of lending”. “With the exception of the first two quarters of the new program, it is proposed that in each quarter after 15,000 applications for a mortgage Start-up loan submitted in that quarter together with an application for loan installment subsidies are registered in the subsidy register system, the period for accepting new applications is temporarily suspended until the beginning of the next quarter” – it was reported in the OSR.

As noted, the experience with credit support programs implemented in the past was taken into account when designing this solution. The phenomenon of cumulative demand for credits was – in the opinion of the project originator – a factor that had a negative impact on the housing market, causing a periodic state of significant market imbalance. The effect of this impact was pressure on the growth of housing prices and disturbed decision-making processes concerning both the supply and demand sides.