When banks will facilitate access to mortgage loans
However, you can’t be sure whether it will be much easier to borrow money to buy a house or an apartment soon.
And it depends on whether the long-awaited recovery will take place on the real estate market. However, it is worth paying attention to two adverse phenomena.
Profits of banks
The first is a clear drop in the profits of banks (listed on the stock exchange) in the first half of the year, compared to the first half of 2008 – by as much as 40 percent.
This means that the capital of these institutions will grow more slowly, even if financiers do not decide to pay dividends again. Banks also need to maintain large reserves in case loans are not repaid.
Much will also depend on the ability of banks to collect outstanding loans. If they succeed, they will reduce their mandatory reserves, which in turn will increase their ability to borrow money.
The financial standing of banks deteriorated significantly in the first half of 2009. Banks such as BPH or Fortis recorded high profits a year ago, and now they have started to generate losses. Most of them ended the first half of the year, but their profits decreased, sometimes even by several dozen percent.
It is no wonder then that the data on the number of mortgages granted is not comforting. In the second quarter, banks granted them by 39% less than in the same period of 2008. However, compared to the first quarter, there was an increase of 35 percent. – results from a survey conducted by the Open Finance consulting company.
Increase in the number of mortgage loans
However, the increase in the number of mortgage loans granted in the second quarter is seasonal. We would like to remind you that even though in the first half of 2008 the mood was not good (the interest rate on loans increased and housing prices remained record high), banks in the second quarter of last year recorded almost as good sales as in the record-breaking second quarter of 2007. Therefore, the current increase in the number of loans granted on a quarterly basis may be seasonal.
The reasons for the collapse in the mortgage market are easy to define. The financial crisis has limited the banks’ ability to grant new loans, and the economic crisis has reduced their demand.
In turn, placing high requirements on clients’ own contributions and the level of income effectively excluded a significant part of those applying for money. On the other hand, an increasing proportion of transactions are carried out in cash, although this claim is difficult to prove.
It is comforting, however, that the government’s “Family on its own” program is doing a lot of good on the market, offering bank clients assistance in paying interest over the first eight years. In the second quarter, banks granted 4,191 loans under this program, which is less than 10 percent. all mortgages granted during this time. The most reliable summary of the situation on the mortgage market is the twelve-month statement – from July 1, 2008, to June 30, 2009.
Number of mortgage loans granted dropped by 26 percent
In this approach – excluding seasonal fluctuations – the number of mortgage loans granted dropped by 26 percent. This is also because customers have lost access to cheap borrowing in foreign currency. After the weakening of the USD between August 2008 and February 2009, it is becoming increasingly difficult to convince clients that it is a safe and cheap solution for them.
The number granted in the second quarter of this year Foreign currency loans fell by nearly 90 percent compared to 2008 Q2, when these loans were at their peak (ironically at a record low exchange rate).
In the structure of total mortgage loans, foreign currency loans accounted for in Q2 this year. only 15% market, while a year ago it was 68 percent and in the first quarter more than 30 percent. All in all, the cheap loan offer has shrunk, which is definitely not a positive phenomenon.