Poles’ creditworthiness increased by as much as 25 percent over the past year. Just because of lower interest rates on loans, creditworthiness increased by 18 percent.
In addition, the extension of the creditworthiness calculation period by 5 years translated into the possibility of taking a higher loan by a further 4-6 percent.
Market changes, a decrease in interest rates on loans
As well as the loosening of the credit policy by the Polish Financial Supervision Authority, and in particular the extension of the repayment period when calculating creditworthiness, are the main components that made up the average creditworthiness increase by 25 percent.
In the last months of 2012 and the first half of 2013, the Monetary Policy Council reduced 8 interest rates, by a total of 225 basis points. This translated into a decline in the Wibor rate, which is significant for borrowers.
We observed its decline several months before the first reduction of NBP rates and since July 2012, within a year and a half, this rate has fallen from 5.14% to 2.70%. Such a large decrease caused a reduction in loan installments. For every 100 thousand indebtedness, when taking a loan for 30 years, the monthly installment fell by about USD 150 from USD 640 to USD 490.
The consequence of the lower installment
Was higher creditworthiness. At the same level of income, a lower monthly load allowed for a higher loan. From January 2013 to January 2014, only because of lower interest rates the average creditworthiness increased by around 18 percent. For example, a person earning 5000 net at the beginning of 2013 could take a loan in the average amount of USD 390 thousand. Only due to a lower interest rate and a lower installment within 12 months, the available amount increased to about USD 460,000.
Added to this is the second important component, which increased the maximum loan amounts, i.e. the extension of the maximum creditworthiness calculation period. The Polish Financial Supervision Authority, in Recommendation S adopted in June 2013, changed the rules for calculating creditworthiness.
So far, for the purposes of its calculation, banks had to assume a maximum loan repayment period of 25 years. Pursuant to the new regulations, this period was extended by 5 years. This method of calculating creditworthiness increased the available loan amount by about 4-6 percent.