Criticism of Poland's real estate market has become almost a national sport. There are very few apartments, they are expensive, and there are certainly too many people wanting to buy them. Could it get worse? naturally. If reverse mortgages become popular in Poland, young Polish people will be able to forget about their own apartment. But the elderly in the future may not die of hunger.
It seems that banks are not quite ready to sell reverse mortgage loans, but that may change
A lot can be written about the real estate market in Poland. The problem is that its advantages are mainly due to the fact that others have it worse. Housing prices are at an all-time high. Many of them are being built, but their quantities are still far too small to meet the ever-increasing needs. Successive government housing programs have proven to be a failure at best, and at worst another catalyst for rising prices.
As if that were not enough, relatively wealthy Poles have insisted since the 1990s that an additional apartment represents an ideal capital investment. In these circumstances, young people, who are often still working, can practically forget about buying their own roof over their heads. After all, they stand no chance with different types of investors: from their parents, through flippers to foreign funds. Many of them face an expensive loan that they will have to repay for much of their lives. However, some people may receive a real gift from fate: inheriting an apartment from someone else.
However, it is possible that the chance will decrease significantly in the future. There is such a thing as a reverse mortgage. We are talking about a special agreement concluded with the bank. In exchange for a specified amount of money, paid as a lump sum or in the form of a monthly annuity, the institution receives a credit on the mortgage. The owner of the property can use it until his death. The bank is not entitled to use it until after one year. During this period, the heirs still have the opportunity to repay the debts incurred by the deceased.
Currently, reverse mortgages are not very popular. Polish banks do not offer it to their customers. This may be somewhat surprising, given the adoption of the Reverse Mortgage Law in 2014. Meanwhile, as TVN24 reported, in the period 2010-2022, mortgage funds paid annuities to clients in the total amount of PLN 29.5 million. We are talking about a related enterprise, selling an apartment for a monthly installment. Unlike a reverse mortgage loan, you don't have to be a bank to offer such a product.
A reverse mortgage could destabilize Poland's real estate market along with piling up retirement woes
The sum of PLN 29.5 million spread over a decade does not have to make much of an impression. However, everything may change if we take into account the case of the Polish pension system. There is no point in fooling yourself: today's young people face hunger pensions. ZUS forecasts last year are quite pessimistic in this case. Poles aged 30-39 in 2023 can count on 18.7% pensions in the future. Last salary. Assuming, of course, that they pay their contributions conscientiously.
Despite inflationary indicators and government pension benefits, the situation for the elderly is not always easy. There is less money in your wallet, you have to live on something, and medicines are not free. So why wouldn't a retiree want to provide himself with additional funds in the last years of his life? The annuity, according to estimates by the Association of Financial Institutions, usually makes up up to half of the monthly income from pensions from ZUS.
However, if retirees decide to give their apartments to banks or mortgage funds, they will go to the secondary market or be rented to someone. The pensioner's heirs will enjoy it. From the point of view of such a testator, a reverse mortgage or selling a condo for a lifetime annuity is a very good deal. Not everyone cares about the housing needs of their loved ones, especially after their death. Single people don't even have this kind of dilemma.
The scenario described above is, of course, theoretical considerations. At the moment, there is no indication that Polish banks will change their minds about reversing mortgages. However, legal solutions exist and someone will likely eventually use them. The real estate market is already unstable enough without this. Its organization and civilization appear to be among the most important challenges facing contemporary Poland.
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