There are details about the new loan subsidies

The “2% safe loan” has ended, but there will be a new interest subsidy program – “Mieszkanie na Start”. Minister Christoph Heitmann and the Ministry of Development and Technology have just revealed the first details. It is intended to be calibrated in a way that reduces the risk of another price bubble. Is this even possible? Who should get a new, cheap home loan?

As we know, the “2% safe credit” period has just ended. About 45,000 households will benefit from interest rate support for 10 years (total value of PLN 16 billion). Some analysts estimate that “thanks” to the program, the demand for mortgage loans in Poland has somewhat doubled, which has led to an increase in apartment prices by 10-15% and burdened other buyers with higher costs. This didn't help renters either, because the more expensive the apartments were, the higher the rent.

But there is also no shortage of supporters of the “2% secure loan” and generally supporting buyers for their first apartment. They say: “If you are buying your first apartment, it should be easier for you, and if you are buying a second and subsequent apartment, you should pay more.” This is a gross oversimplification, but loan subsidies are of course the simplest tool for improving access to loans. And the only one that has been used in Poland so far.

The “Rodzina na Swoim” program was based specifically on loan subsidies in the years 2007-2013. State Bank Gospodarstwa Krajowego paid half the interest installment for the first eight years of loan repayment (200,000 people benefited). Then there was the “Mieszkanie dla Młodych” programme, which in turn provided one-time support for special contribution (110,000 families benefited). The largest “support programme” were loans in Swiss francs (up to 700 thousand families benefited from them).

It is clear that the new government does not want to pursue long-term projects, such as the construction of rental apartments by state or local governments, tax changes that “liberate” vacant properties (high taxes on people who keep empty apartments), and the introduction of financial instruments that enable the construction of rental apartments. To save money in banks (such as REITs), making the capital market more attractive (so that housing is not the only vehicle for storing capital), and releasing attractive land in cities and surrounding areas.

For now, the new government is following the old path, which means it will also support loans. Minister of Development and Technology Christoph Heitmann (in his first days in office he carelessly announced that he would like more “2% safe loan”), introducing the “Mieszkanie na Start” programme, declared that he would like to avoid the mistakes of his predecessors who provoked a price bubble in the real estate market , but I'm not sure if that's “doable”.

“Mieszkanie na Start” by Donald Tusk. Four things we know about him

Currently, public consultations have begun on the new “Mieszkanie na Start” program (not to be confused with the program of the previous government). We know the first details. There will be a lot of differences compared to the “2% secured loan”. But will they withstand the risk of painful side effects on the real estate market?

First: This program is supposed to be intended for families, not individuals. It will be possible to buy only the first apartment, unless the family consists of at least five people – it will be possible to finance another, larger apartment for the family in this way (and this is a good idea, it is worth focusing on improving housing conditions, and not just stimulating the construction of compartments).

On the other hand, if a person is single, he will only be able to benefit from the program until he reaches 35 years of age. Well, this can be avoided, as the number of marriages in Poland may mysteriously increase. Although this is not necessarily the case, because the institution of marriage will not be required, two individuals will be able to come and say that they want to take out a loan together as a family of two. So the 35-year maximum is basically meaningless.

Second: There will be income limits, but they will be moderate and based on the “PLN for PLN” principle. The richest Poles will not benefit from the program, although the limits will be very light, i.e. for a single person (up to age 35) the total monthly income reaches PLN 10,000, for a couple without a child – a total of PLN 18,000 for a couple with one child – a total 23,000 Polish zlotys. When a childless couple has two salaries totaling PLN 10,000 (i.e. higher than the national average), you can always look for another “poorer” borrower.

In addition, the principle of “one zloty for one zloty” is applied, that is, if a person exceeds the income limit, he does not immediately exit the program, but the cheap loan limit is reduced (we will talk about the limits later). For every zloty of “excess” income, the cheap loan limit decreases by 0.50 zloty. But this will only work up to 500 PLN monthly income. This means that after exceeding the income limit by a greater percentage, we are excluded from the program.

Third: The “zero percent” loan will only be available to a select few. The interest rate on the loan under the “Mieszkanie na Start” program will depend on the number of family members; Singles and childless people will be able to buy an apartment with a loan at an interest rate of 1.5% per annum, families with one or two children – at 0.5-1% per annum, only for families of five it will be a classic loan at zero percent (i.e. “passed” Electoral promise, but without significant costs, since there are few such families).

It will likely be like in the “2% safe credit” situation, where banks will add margins to the “official” interest rate generated by the subsidy, so in effect these loans will be at 2-4% per annum. Of course, only for a certain period and only to a certain extent.

Fourth: The support will only be available for the first ten years, and will only cover part of the loan amount. The ten-year term is similar to that of the “2% Safe Credit,” but the limit mechanism is different. Under the PiS government programme, you can buy an apartment worth up to PLN 600,000. It will be different here – the subsidy will only cover a certain amount of the loan, so it will be a “double” loan where part of the amount will be subsidized and part will not.

More precisely, it will look like this: for a single person (up to 35 years old) there will be a loan of PLN 200,000 with an interest rate of 1.5% (possibly plus a margin), for a couple without a child – PLN 400,000 (which is enough for an apartment of 30 square meters In a large city), and for a couple with a child – PLN 450,000. For each additional person in the household, the limit will be increased by PLN 50,000.

Therefore, a cheap loan (a little cheaper than a “2% safe loan”) will cover approximately half of what will be borrowed from the bank (i.e. half of the apartment, assuming that the client finances almost the entire apartment with a loan and does not have a high private contribution).

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Even more “drugs”, but at a (slightly) lower concentration.

What do you think of that? In my view, this last parameter actually eliminates part of the risk of a bubble in the real estate market. If only part of the loan is covered by subsidies, the program has greater flexibility. It will be possible to buy a larger apartment and have a larger down payment, so demand will not be focused on a specific group of increasingly scarce properties.

It also seems that with the subsidy relating to only part of the loan, banks will calculate the creditworthiness of customers in a standard way (and not “after the subsidy”, i.e. in a preferential way, as was the case in the “Safe Credit 2%”). ). Perhaps banks will have no incentive to increase the margin on “preferential” loans, and on the other hand – there will be no loans to people who would not be creditworthy without subsidies.

Compared to the “2% secure loan”, the subsidy will cover a smaller amount, but the loan in this part will be slightly cheaper than the PiS programme. It will be more flexible, which means you will be able to buy larger apartments. Will this be enough to limit the rise in real estate prices that may “eat up” part of the subsidy? I don't really believe that. There is only one type of loan subsidy that does not increase home prices – the type that is difficult to obtain. What Minister Hetman showed was not of this kind.

We have exactly what you described recently – money so expensive that we have become addicted to loan subsidies, like drugs. This medication will probably now be given in a slightly smaller, more widely distributed dose, but it will be given again and thus produce the same effects. Minister Hetmann announced that he would like to launch the “Mieszkanie na Start” program in mid-2024. This means that property sellers and developers will start including it in their prices now.

It will be a little different – because the new program will be more open to people with higher incomes and will spread demand more – but it's possible that developers, banks and landlords will be able to open the Champagne after all. It looks like my “real estate quarter” rate of return will be decent this year as well.

The action planned by Donald Tusk's government will be justified in the long term only if the government also takes all other measures that will reduce the imbalance in the housing market in the medium and long term (more apartments for rent, vacancies, activation of Poles) Saving in banks ). Which limits the profitability of speculation on apartments. And if in a few years it is possible to stop giving other portions of the “medicine” in the form of loan subsidies (funded by everyone).

If Tusk and his team take the easy route and don't do all of this in a period or two, they will be another blight responsible for the lack of apartments for young people. Because loan subsidies are a half-measure that leads to major side effects and injustice (remember that the cheap loans offered to those who can afford them are financed by taxes paid by those who cannot afford to buy and rent an apartment).

Read also: Another prosthetic for Poles who want to own an apartment. Why can we only afford dentures?

Not only will the “Mieszkanie na Start” program be a gift to borrowers from Donald Tusk's government. There are also credit holidays for 2024 AD. Who will get it and who won't? There will also be a “new” borrower support fund, providing much greater opportunities to write off part of the loan.

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