Decline in Household Loans Evident in NBP Data, With a Renewal in PLN Mortgages

According to recent data from the National Bank of Poland (NBP), the value of loans to households has experienced a noticeable decrease, largely attributed to a decline in mortgage values. The total value of household loans at the end of October this year amounted to PLN 774.6 billion, reflecting a 3% year-on-year decrease (nearly PLN 24 billion) and a 1.3% month-on-month decrease (PLN 10.5 billion) compared to September.

The primary contributor to the decline in household loans is the diminishing value of mortgages. The aggregate value of all mortgages for households, encompassing both PLN and foreign currency mortgages, stood at PLN 474 billion at the end of October. This represents a 5.6% reduction compared to the previous year and a nearly 2% decrease from September. The significant drop is predominantly attributed to foreign currency mortgages, especially Swiss franc mortgages, which have contracted by a substantial 25% over the past year, with a 13% decrease on a month-to-month basis.

Despite the challenges faced by foreign currency mortgages, there has been a resurgence in PLN mortgages. The PLN mortgage portfolio witnessed a 0.6% increase (PLN 2.2 billion) from September to reach PLN 396 billion. However, on an annual basis, the portfolio’s value decreased by 0.6%, influenced by a slump in new sales in the previous autumn and the early months of this year, coupled with increased mortgage overpayments. The revitalization of PLN mortgages can be attributed to the government’s Safe Credit 2% program launched in July, offering installment subsidies. The effects of the program became evident in September, accompanied by a slight reduction in interest rates and relaxed requirements by banks, including the allowance of the so-called interest rate buffer by the Polish Financial Supervision Authority.

On a positive note, the consumer loan portfolio experienced a 1.1% year-on-year growth (PLN 2.1 billion). However, on a monthly basis, it contracted by 0.7% (PLN 1.5 billion) to reach PLN 196.4 billion. Concurrently, the portfolio of current loans for entrepreneurs and individual farmers, both classified as households, exhibited a 4.9% year-on-year increase (PLN 2.3 billion) and a 3% month-on-month increase (PLN 1.4 billion), reaching PLN 48.9 billion.