Value of new mortgages in Poland passed 10 billion zloty for the first time in January

In January, the value of mortgages issued in Poland exceeded 10 billion zloty (€2.3 billion) for the first time in history, as the last of contracts eligible for a popular government subsidy scheme for first-time buyers were finalised.

The figure was five times larger than in the same month a year earlier, while the number of contracts signed increased fourfold, data from the Credit Information Bureau (BIK) shows.

BIK estimates that of the more than 10 billion zloty in mortgages issued in January, around 6 billion fell under the government subsidy scheme.

Known as “2% Safe Credit”, it was introduced in the middle of last year by the former Law and Justice (PiS) government and provided first-time buyers with a fixed interest rate of 2% for 10 years. The difference between the guaranteed rate and market rates is subsidised by the state.

The programme was closed at the beginning of the year after the funds earmarked for the project ran out. The new government, which took office in December, presented an outline of its own planned programme in January, but no bill has yet been submitted.

“The record January performance is the result of the continued processing of applications under last year’s 2% Safe Credit programme,” said Sławomir Nosal, the head of BIK’s analysis team.

The number of people applying for mortgages in Poland tripled year on year in July, while the total value of applications rose over 270% to a record level.

The increase follows the launch of a programme of government subsidies for first-time buyers

— Notes from Poland 🇵🇱 (@notesfrompoland) August 9, 2023

“Admittedly, applications for these loans could only be submitted until the end of December 2023, but in the case of housing loans, the process at banks takes one to two months from the submission of the application. Therefore, the launch of the loans applied for last December is taking place in January and still in February,” Nosal added.

BIK reported that, by mid-February this year, loans totalling 30.6 billion zloty had been granted under the programme.

The scheme has also contributed to a further rise in house prices in Poland, which in the third quarter of 2023 (just after the scheme was introduced) grew at the EU’s second-fastest rate year-on-year and fastest month-on-month.

Prices have also been pushed up by a shortage of housing, with some estimates pointing to a shortfall of as many as 4 million units. That has made entering the market difficult for young Poles, nearly half of whom live with their parents, one of the highest figures in the EU.

Poland has the EU’s second-highest annual growth in house prices.

The new @EU_Eurostat data also show Poland had the highest quarterly price growth after a mortgage subsidy scheme introduced by the government last summer stimulated demand

— Notes from Poland 🇵🇱 (@notesfrompoland) January 27, 2024

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Main image credit: Andrea Piacquadio / Pexels

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.

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