Banks are constantly tightening the criteria for granting housing loans, but to a lesser extent

Banks in the second quarter of this year have tightened the criteria for granting housing loans for the eighth quarter in a row, according to the study entitled “Situation on the credit market, Q3 2012” presented by the National Bank of Poland.

In addition

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According to the survey, also in the third quarter of this year. The banking sector plans to further tighten the requirements for borrowers. However, the scale of policy tightening in April-June was the smallest since Q3 last year, and the one expected in July-September is also the lowest since the same period.

The NBP report is based on a survey addressed to the chairmen of credit committees of 29 banks, which together have as much as 83% share in the entire portfolio of claims on households and enterprises. The survey is conducted once a quarter, and the current one was conducted at the turn of June and July.

Situation in Q2

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In the second quarter of this year, the net percentage of banks that tightened their lending policy regarding housing loans amounted to 13.0% and was the lowest since 2011 Q3, when it was equal to 12.6%. This result is much better than in the previous two quarters, as it was 85.3% in the first quarter of this year and 46.0% in the fourth quarter of 2011. The banks increased their requirements regarding: required collateral, required borrower’s own participation in the investment and in other conditions, but also decided to lower: loan spreads, loan spreads for higher risk loans and non-interest loan costs. Loan spreads and non-interest loan costs have been reduced for the first time since 2011 Q3, and loan spreads for higher-risk loans went down for the first time since Q2 of the same year. As in the previous quarter, the banks decided not to make any moves on the side of the maximum loan period.

The main reason for the tightening of lending policy in the area of ​​housing loans in 2005 Q2 (19.2% of net responses) there were different conditions than those included in the survey, and to which, according to the NBP, banks included the issue of updating credit risk assessment models. Equally 11.3% impact on this and no other approach of banks was also affected by the current and expected capital situation of banks and changes in the share of non-performing loans in the housing loan portfolio. However, the scale of the above phenomenon was reduced by the competitive pressure felt by banks and the increase in demand for housing loans they observed. As for the latter, its increase was noticed by 24.6% of the net institutions, although during the previous three quarters it recorded its decline.

Forecast for Q3

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In Q3, the net percentage of banks expecting to tighten their lending policy for housing loans is 22.0% and is also the lowest since 2011 Q3, when it was 19.2%. In the previous three quarters it was respectively: 22.9% (Q2 2012), 86.2% (Q1 2012) and 59.5% (Q4 2011). For the first time since 2011 Q3, banks also positively assess (30.2% net of institutions) a possible change in demand for housing loans, i.e. they expect its increase.