The “Safe Mortgage 2%” program, suspended since January 2024, is expected to be replaced in July by a new one called “Start-Up Flat”. Experts from the portal RynekPierwotny.pl assess its potential impact on the housing market.
Work on the new borrower support program has only just begun, so it’s too early for any final evaluations.
“The Ministry of Development and Technology is perhaps quietly hoping for a miracle. This may be indicated by the maximum loan amount that will be covered by state support. For singles, this will be 200,000 PLN, and in provincial cities where flats are the most expensive – 240,000 PLN with an interest rate of 1.5%. That’s too little to think about buying any property in Warsaw, Krakow, Gdańsk or Wrocław. It is unlikely that developers will use the next six months to introduce flats at such a price for sale,” says Marek Wielgo, an expert at RynekPierwotny.pl.
In order to fulfill the dream of owning a home, a single person would have to have at least twice that in the form of their own contribution or take a correspondingly higher loan, part of which would have a market interest rate. The amount of such a composite loan is to depend solely on the single person’s creditworthiness. This could be high, as the assumptions of the “Start-up Flat” convey, the beneficiary’s income could reach 10,000 PLN gross.
Marek Wielgo believes that setting income thresholds in the new “Start-up Flat” program will not change anything compared to the “Safe Loan 2%”. These thresholds are quite high, for example, in the case of a household of two people – 18,000 PLN gross, while the monthly gross income of a three-person household could not exceed 23,000 PLN. “And that’s a good thing because introducing low income thresholds could threaten that in the future some borrowers would not be able to pay off their loans. Even more so as there will still be no requirement for own contribution because the state will provide adequate guarantees,” believes the RynekPierwotny.pl expert.
Reducing the loan price, even to 0% in the case of families with many children, will probably please many. The question is whether it is a good idea to delay the purchase of an apartment until mid-year when, as predicted by the Ministry of Development and Technology, the new program will start.
“Of course, there is hope that developers will finally believe in the sustainability of housing demand growth and radically increase their supply. Especially in the popular segment, built with loan takers in mind,” comments Marek Wielgo.
At the same time, he admits that one cannot rule out an unfavorable scenario from the point of view of flat buyers, which is a certain imbalance between demand and supply for some time. This is largely due to the “Safe Mortgage 2%” program, which accelerated the purchase decision of many people, including those who could not count on state subsidies. The result of this was a sharp increase in flat prices in 2023, especially in the third quarter, when state-subsidized credit appeared in banks’ offers.
It’s worth noting that the program is mainly addressed to young people buying their first apartment. Many of those at the beginning of the career path do not have high creditworthiness. Moreover, immigrants who rent flats on market terms usually do not have a chance to save money for their own contribution. Therefore, this group of buyers primarily needs flats at a low unit price, up to 400,000 PLN. Let’s remember that this is approximately the average value of mortgage loans granted by banks last year. The problem, however, is that the “Safe Mortgage 2%” “cleared” housing markets of the biggest cities of such cheap flats.
Data from BIG DATA RynekPierwotny.pl shows that Łodź is the only metropolis in which the supply of flats developed at the average loan value is relatively large, and from June of last year even increased slightly from just over 1.4 thousand to almost 1.5 thousand. At the other pole is Wrocław, where in late June buyers could choose from over 700 flat offers to buy for 400,000 PLN, and now there are less than… 100, which is 87% less! The choice of such flats also declined sharply in Warsaw. Six months ago, developers here offered over 400 flats with a price disclosed below 400,000 PLN, and currently there are 77% less. Unfortunately, in almost all metropolises December brought a decrease in the offer of flats at this price. Łódź was the exception.
Marek Wielgo fears that if this trend continues, then in half a year in most of the biggest cities many potential beneficiaries of the “Start-Up Flat” program, especially singles, will have nothing to look for.
