Bankers intensively promote consumer loans because they intend to reverse the downward trend that has been going on for several decades in the number and value of loans granted. They also want to stop the retreat of consumers who are increasingly willing to use parabank services.
Requirements of consumer loan agreements
An intensive TV campaign promoting cash loans has been going on for several weeks. The main websites of at least a dozen financial institutions are dominated by information encouraging to take out loans. By the way, those interested are tempted with bonuses such as free prepaid cards or holidays in Sicily (Credit Loan). Some banks ease certain requirements of consumer loan agreements, e.g. they extend the standard repayment period borrows cash for 10 years with an average market period of 6-7 years) or allow it to withdraw from the contract within 21 days (BPH), i.e. seven more than the Consumer Credit Act. Even entities usually more oriented towards affluent clients, decided to emphasize the offer of cash loans more strongly.
Causes of declines in the loan market
Why is this happening? What happened that after more than three years, banks again began intensive marketing activities in the field of loans? After all, the crisis did not let go. Quite the reverse: even the government has revised its announcements regarding economic growth (down) and unemployment (up).
This offensive is a response to the decline in revenues in the mortgage segment, which for banks are one of the most profitable products (expensive and long-term). Due to the tightening of the T recommendation, changes in the “Family on its own” program negative for customers and the announcement of its termination as well as the uncertainty on the labor market and the increase in the cost of living, both the availability of housing loans and the number of transactions on the real estate market decreased, although they also reduced prices of the premises. Effect? The percentage of people who cannot afford an apartment, even on credit, has increased.
According to the data of the banking system MOREAN-FEIR, in March 2012 the number of loan agreements decreased by 5.9 percent. compared to December 2011 and amounted to 48,723 units. At the same time, the value of new mortgage loans decreased by 5.46%. – up to PLN 10.2 billion. Transaction prices were on average 4.39 percent lower than in December. In the second quarter of this year the value of loans amounted to PLN 10 billion (-1.53%). From April to June by 1.8 percent instead, the number of loans granted for the purchase of real estate increased (to 49620 units). Transaction prices were once again lower – from 1 to 3 percent. compared to the previous quarter.
NBP data indicate that by December, i.e. the entry into force of the new Act on consumer credit, by July the volume of newly granted loans had dropped by PLN 4.7 billion, for a year – by PLN 5.18 billion and amounted to PLN 134.24 billion. BIK information shows that the number of new loans has been decreasing since 2009 and their value since the end of 2010 (in the peak period Poles owed banks PLN 143.66 billion). Less affluent customers, interested in lower amounts, and according to banks with no creditworthiness, turn to loan companies. The latter are not subject to the guidelines of the Polish Financial Supervision Authority and the Consumer Credit Act. According to the estimates of the consulting company Deloitte, the size of the shadow banking sector in our country is already PLN 2-3 billion.
Loans are unlikely to become cheaper
However, bankers expect an increase in demand for consumer loans. Despite their decreasing volume and competition from Teart Banks, supervised financial institutions do not intend to reduce the price of loans. Currently, the APRC of most offers exceeds 20 percent. and oscillates around 22-24 percent. Some exceed 30 percent. – Our surveys show that banks are more likely to raise interest rates. The KNF is expected to succeed, the chairman of which announced the amendment of the T recommendation at the beginning of September, although it is not yet known when it would take place. Its introduction requires certain aspects of the amendment of the Act.