Its purpose was to reduce currency risk for people who earn in cash, took out loans for housing in foreign currencies, mainly in USD. This risk increased significantly during the crisis initiated by the financial crash in the US in September 2008.
Poles at that time forgot the principle that loans in foreign currencies are taken when they are expensive, counting that gold will strengthen against them, as a result of which the debt expressed in the Polish currency will decrease.
The exchange rate then fell to the lowest
Instead, up to 200,000 Poles were also swept in this year for loans in the Swiss franc, whose exchange rate then fell to the lowest level in the history of around USD 2 (we provide GFI average rates), and on July 31, 2008, it was even only USD 1.96.
When the crisis broke out, real estate recovered and the zloty began to lose value. On August 9, 2011, the franc cost USD 3.92, so the debt of borrowers doubled in 2008, e.g. from borrowed USD 300,000. USD 600,000 were made. to be returned (minus the amount already repaid).
Currently, the franc exchange rate is about USD 3.40, which means that for each loan borrowed in mid-2008, USD 1.70 must be given away (plus interest and – proportionally – other loan costs). “Franek” borrowers from that period (and those later, borrowers in francs until July 10, 2011) still have more to pay than they borrowed ( some of them much more), and their debt usually exceeds the value of the property.
The situation was similar to the euro. For example, between July 25, 2008, and February 16, 2009, and so in less than half a year, its exchange rate increased by over 50%. (from 3.20 to 4.83 USD). Currently, the euro costs around 4.10-4.15 USD.
What has changed since July 1?
The last six provisions of the ‘Good Finance on good practices in the management of mortgage-secured credit exposures’ (that is its full name), resulting in the fact that you can almost announce the death of foreign currency loans.
Banks now strictly adhere to the principle “we will give you a loan for an apartment only in the currency in which you earn a living”.
Also, check meticulously whether the borrower can handle the loan agreement if the GFI interest rates rise significantly or the zloty exchange rate changes against the loan currency .
However, every year, banks will have to analyze whether the value of mortgage collateral does not exceed the value of the property (so-called stress tests). The loan can be taken for at least 35 years.
However, most of the recommendations contained in Good Finance have been in force since January 1, as a result of which in the first quarter of this year.
The total value of currency loans decreased to less than 0.5%. the total value of all loans granted. In the last quarter of 2013, there were almost twice as many (0.93%). For example, in the third quarter of 2008 as much as 79.9% all mortgages were also in USD.
And if you earn in foreign currency?
Housing loans in foreign currencies can still be taken by people living in Poland (or families), who receive the majority of remuneration in euros, British pounds or dollars.
In Poles who went abroad to legally earn some money for an apartment and borrow the rest in a national bank, Good Finance hit the ricochet: they would not get credit.
The barrier is also the fact that currently only few banks offer foreign currency loans. Earners in euros for a loan can go to Good Finance Bank. Whoever has a salary in dollars will get a loan in GBank, and Good Finance, in pounds – he can go to GBank. On the other hand, those who receive a salary in USD will not receive a loan at any Polish bank!
The recommendation will reduce the builders?
While not denying the expediency of issuing Good Finance, it should be noted that it significantly limits Poles’ access to mortgage loans.
This, in turn, may result in a reduction in the number of flats erected, i.e. a decrease in orders for construction companies. Meanwhile, construction is believed to be the flywheel of the economy. A side effect of the recommendation may also be that many builders can land on the pavement …