In 2014, the Polish Financial Supervision Authority began a cycle of stricter requirements regarding the amount of own contribution in mortgage loans. Although today the minimum is theoretically 20 percent property values, most banks are ready to borrow 90%. investment. The change in lenders’ approach can be clearly seen if we compare current offers with those from two years ago.
The requirements regarding the minimum contribution amount were raised gradually. The cycle ended in 2017 – from then on, supervision expects banks to require customers to have at least a 20% share in the investment. The tightening of regulations was to eliminate products from the market in which the customer could finance the purchase of an apartment only with funds borrowed from the bank, and even receive a loan with a value exceeding the value of the premises (with an LTV ratio above 100%).
The basic goal has been achieved – borrowers must have their own funds today to have a chance to get a loan. The exception may be only situations where there is a large discrepancy between the price of the premises and the value estimated by the bank or, which can be considered a potentially dangerous practice, the own contribution is financed by another type of loan (e.g. more expensive cash).
In practice, however, the lower limit of own contribution is higher than might result from reading the PFSA recommendations. The supervision left the gate open – half of the required own contribution can be additionally secured. This means that the borrower’s actual minimum commitment is 10 percent. apartment prices.
Initially, the banks carefully probed the possibility of using the opportunity left by the KNF. This can be seen, for example, when we compare lenders’ proposals from the latest edition of the Bankier.pl mortgage ranking and offers for the same client profile two years ago.
In February 2016, the list of banks ready to lend customers funds at 90 percent property value was a lot shorter. In February 2018, five of these institutions already offer LTV loans 90% banks remain in the group of institutions maintaining higher requirements. Banks awaiting firmly 20 percent today own contribution constitute a narrow group. Popularity of liabilities from LTV 90% she also made the institutions earlier adopting a more conservative approach gradually change their attitude. Customers should remember, however, that more accessible credit is in most cases more expensive. Banks impose on the lenders with low own contribution a loan margin higher by 0.14 percentage points on average (compared to a 20% deposit commitment).