Experts predict that Poles’ debt levels will increase in 2025, with individuals over the age of 30 being most affected. The expected rise will be driven by a growing reliance on mortgage and consumer loans. Long-term inflation has left many struggling to cover basic expenses, as prices continue to outpace wage growth. Consequently, more Poles are turning to non-bank financial institutions, raising concerns about the risks of a debt spiral.
Post-Holiday Spending and Rising Debt
The holiday shopping season has intensified the issue of rising debt among Poles, which has been steadily increasing. While Poland is still one of the least indebted societies in the European Unionâwith household loans accounting for 20.3% of GDP (compared to 18.2% in Greece and 8.6% in Lithuania)âthe trend toward higher borrowing is concerning. According to Dr. Maciej Goniszewski from the University of GdaĆsk, household debt levels grew by PLN 11.01 billion (1.4%) year-over-year as of Q3 2024, reaching PLN 796.11 billion. However, due to inflation, this nominal growth equates to a real decrease in debt.
Easing Loan Criteria and Economic Projections
For the first time since Q4 2021, Polish banks eased lending criteria for consumer loans in Q3 2024, a trend expected to continue into 2025. Forecasts suggest:
- A reduction in interest rates from 5.75% to 4.70%.
- A decrease in unemployment from 3% to 2.9%.
- An 8% increase in average wages.
- A 3.3% rise in private consumption.
These factors are expected to boost borrowing activity.
Inflationary Pressure and Consumer Debt
Persistent inflation is reducing Poles’ purchasing power, prompting more people to take on debt to cover expenses. Dr. MaĆgorzata Porada-RochoĆ from the University of Szczecin predicts a rise in debt levels due to consumers taking out additional loans to repay existing obligations. This includes increased use of installment plans and buy-now-pay-later (BNPL) schemes. The housing market, particularly among younger Poles, also indicates potential growth in mortgage borrowing.
Concerns About Non-Bank Lending
Non-bank financial institutions are experiencing a surge in demand, with their loan volumes increasing by 31.3% year-over-year to PLN 1.95 billion in 2024. According to Adrian Parol, a restructuring advisor, such institutions often offer costly financial products, trapping some consumers in a cycle of unmanageable debt.
The Impact of Rising Minimum Wages
In 2025, Poland’s minimum wage will increase to PLN 4,666 gross, further complicating debt collection. Creditors are restricted from garnishing wages below this threshold, limiting their ability to recover funds. Marcin Czugan, president of the Association of Financial Enterprises in Poland, notes that while this protects low-income workers, it also discourages lenders from extending credit to those earning minimum wage, potentially driving up the cost of other financial services.
Trends in Consumer Debt
As of October 2024, installment loans rose by 5.3% year-over-year to PLN 2.1 billion, with an average loan value of PLN 2,453. However, cash loans saw a sharper increase, rising 37.9% year-over-year to PLN 9.08 billion, with an average loan amount of PLN 25,144. According to Grzegorz Kostrzewa, CEO of ProPrawni, these trends highlight growing financial pressures on households.
Future Challenges and Solutions
Poles are expected to take on more debt in 2025, driven by higher incomes, increased borrowing capacity, and rising living costs. Housing remains the most common reason for borrowing, but loans for vehicles, electronics, home furnishings, and vacations are also significant contributors.
Debt restructuring through extended repayment periods is becoming a popular solution, even at the cost of higher overall interest payments. However, Adrian Parol warns that this trend could lead to a substantial rise in financial difficulties, with the number of people facing debt-related problems potentially doubling.
Conclusion
Polandâs debt landscape in 2025 will be shaped by a mix of economic growth, inflation, and lending trends. While some may benefit from increased borrowing capacity, the risks of over-indebtedness, particularly among non-bank borrowers, remain a pressing concern. Financial institutions and policymakers must address these challenges to ensure sustainable economic growth.
Source: ManagerPlus