Mortgage Load Index – we pay a record low for a loan



The average Polish family statistically spends less and less on servicing a housing loan. According to the Mortgage Load Index (IOH), only slightly more than ¼ of net income is allocated to the purchase of a new apartment of 55 square meters. IOH in the third quarter of this year. was record low and reached 26.07%.

The Mortgage Load Index shows how much of the net income a family must spend monthly earning twice the average wage in the economy to repay the loan taken for the purchase of a 55 square meter flat. Depending on the region, this is from less than 23% to less than 29% of net income. Therefore, these values ​​are much lower than suggested in Recommendation S by the Polish Financial Supervision Authority. We would like to remind you that in accordance with Recommendation No. 9, the level of credit expenses should not exceed 40% of net income. Therefore, the IOH values ​​are well below the limits indicated by the PFSA.

During the year

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There were also changes in the second area determining the value of IOH. The average salary for the analyzed voivodships increased by almost 4 percent, which also allowed to lower the index. The decrease in IOH could have been even deeper were it not for the change in the third area that was unfavorable to its value. The average offer price of the analyzed property increased by 4.25% during the year. However, despite this unfavorable change, IOH reached a record low of 26.07%. It is also worth recalling that in mid-2012 IOH values ​​fluctuated around 40%, so in statistical terms the purchase of a new property is currently a much smaller burden than a few years ago.What decided about the changes?
Three levels determine the IOH levels – the average wage in the enterprise sector, real estate prices, and interest rates on loans. The decrease in IOH in annual terms was mainly due to the reduction in interest on new loans. Despite the increase in average loan spreads, the total interest rate was reduced due to the decision of the Monetary Policy Council to lower interest rates. This translated into lower installments and lower burdens for household budgets.

Regions – a large variety

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Traditionally, we already observe a large variation in IOH values ​​in the region. As almost always, it is the highest in Kraków and Pozland. However, current levels (28.73% and 27.91% respectively) are far from the records from a few years ago. The inhabitants of Kraków had to pay the most in December 2011, when the IOH for this city amounted to as much as 45.28%. In turn, in Pozland, IOH was the highest in June 2012 and amounted to 43.30% at the time. Therefore, the current levels of the index, although the highest in the country, are definitely lower than those recorded a few years ago.

Index methodology 

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The Mortgage Debit Index shows how much of Polish families’ net income is absorbed in repayment of a new mortgage. IOH is prepared as an average for the 6 largest Polish agglomerations , assuming that a loan for 30 years for the purchase of a 55-meter flat is taken by a family of two, earning twice the average monthly salary in the enterprise sector for of a given province. The index is also calculated as the average for loans with LTV (loan to value) at the levels of 95 and 80. The following factors have an impact on IOH: offer prices of flats on the primary market for a given agglomeration, the level of average net remuneration in a given voivodship and current loan interest rate. The basis for the prices of flats used in the construction of the index are the data provided by redNet Consulting on the basis of the tablesesofert.pl The index is prepared with an approximately one month delay compared to the end of the reporting period adopted by the Gald Credit House, as the data of the Central Statistical Office on remuneration in individual voivodships are available only at the end of the month, which follows the month to which they refer.

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