Polish people are getting into higher and higher debts. The number of 40% of the consumer loans are contracted for more than 50 thousands PLN.
Although loan repayment is stable, there are areas and trends that need to be carefully monitored. One of them are higher and higher amounts of loans taken. This year, liabilities for over 50,000 PLN accounted for as much as 40 percent. loans granted by banks. High-value liabilities have the highest risk – their loss ratio reaches 12 percent.
According to BIK data, from the beginning of this year to the end of October, banks and credit unions granted 6.054 million consumer loans for a total amount of PLN 75.107 billion. Compared to the same period of the previous year, their number decreased (by 0.7%), but the value increased by 6.8%.
Given the nominal value, there is still room for a steady rise in consumer loans, especially with rising wages for Poles and record low interest rates. At the moment, half of cash loans is related to consolidation, which means that a person who already has a loan increases their liabilities. This is because, due to the good economic situation, creditworthiness increases and the customer can get additional cash without changing the monthly installment amount.
The President of BIK emphasizes that high-value loans are a potential risk area. Meanwhile, this year as much as 40 percent of loans newly granted by banks constituted liabilities for amounts exceeding 50 thousand PLN. After 3-4 years from granting such a loan, the default rate is 12 percent. and is almost two times higher than loans up to 4,000 PLN. These loans are also closely related to the long term loan. At present, over half of all cash loans in the Polish banking sector are liabilities for a period of over 5 years.
Currently 75 percent cash loans are granted for over 4 years. The average contract period is 46-47 months, and the actual repayment period of cash loans is significantly shorter than the contractual (approx. 23 months).
This often means that in the middle of the contractual repayment period this loan is already replaced by a new loan. As long as we have a good economic situation and low interest rates, customers are bravely indebted. However, if the slowdown occurs and interest rates rise, another loan will be harder to pay back.
Another risk factor to consider is the impending economic slowdown, which may result in interest rate increases. Then the loan installments are likely to increase and the number of customers for whom repayment will become problematic may increase.
There are currently around 100,000 in Poland so-called people excessively indebted who repay 10 or more loans in banks and loan companies.