Retail mortgage mart turns white hot
While the market has burgeoned over the past two years as interest rates at some banks have plummeted from around 18 percent to below six percent - piquing the interest of consumers - recently some banks have started improving the services they offer and jockeying for better market positions.
The country's largest banks, PKO BP, and its largest listed bank, Pekao SA, are at the forefront of the mortgage market, with smaller niche-oriented firms, such as GE Money Bank, making inroads as well.
"Looking at the broader picture," says Robert Moren, spokesman at Pekao SA, "the entire market has taken off because of the Polish economic improvement as a whole."
He explained that a lot of the economic growth from last year came from exports and that has translated into a greater number of Poles with cash on hand. And, as often occurs, people look to invest in real estate when a steady stream of income is foreseen. "They are now able to invest in real estate," Moren says. "There are resources for people now."
On that information, he explains that Pekao improved its mortgage offering this February. "We have changed our offering so it's more focused on clients' needs," he says.
He explains that, today, "simplicity" is the watchword for Pekao - more than ever before it's easier for consumers to get a mortgage with the bank.
He boasts that in one day a potential client - without documentation - can find out exactly how much he or she could borrow, and that within eight days, documentation permitting, a customer can have a deal signed and sealed. "All he needs to bring is documentation of land and how much he earns," he points out. At that point, a consumer is guaranteed a first year interest rate of 5.55 percent; the following years are based on a negotiated rate above WIBOR. Once negotiated, that rate stays constant.
These rates are a far cry from what they used to be, as Moren explains that, in 2001, Pekao lent at 18 percent, which, owing to the small size of the market then, was prohibitive. The results have been very positive. In the first quarter of last year, the bank recorded zł.110 million, compared to a whopping zł.288 million in the same period this year.
And if analysts have much to say about the issue, Pekao numbers are expected to increase still further. "The market has already taken off," notes Artur Szeski, analyst at CDM Pekao, referring to the fact that the upward trend did not start yesterday. "And if we look at mortgages per head, it's still very low compared to in other countries. So the outlook is positive."
However, this environment of conspicuous opportunity lends itself to increased competition. "Everyone is trying to offer mortgages," he says. And, as such, even though margins are fatter than in other EU countries, they are beginning to feel the pinch of competition, as larger banks, whose sheer scale offers advantage, battle it out with smaller banks, whose niche products allow them a place in the market. "The margins are definitely under pressure," he says.
PKO, for one, does not feel the pressure just yet, at least according to Justyna Gałbarczyk, managing director of the bank's real estate financing division.
Gałbarczyk chalks up the success of the relatively new market to interest rates. The bank, at present, offers a host of different mortgage loan types at around six percent. But besides the interest rates, she points to the fact that Warsaw in particular has too few flats. "So basically it's a necessity," she says.
Poles whose private incomes are growing are investing in new property, erecting new buildings or just refinancing existing holdings. She adds, too, that new tax regulations are facilitating the growth.
As this market is growing, Gałbarczyk says that it is almost as mature - in terms of loan types offered - as the longer-standing Western markets. "We have everything," she boasts of the PKO product offering.
Like a lot of other banking peers, PKO offers the gamut of services in the primary and secondary markets. The only difference between East and West, she says, is maybe that banks here don't offer reverse mortgages. These are mortgages aimed at lower income individuals, or pensioners, whereby a homeowner borrows against their home equity and receives regular tax-free payments.
But it's only a matter of time before reverse mortgages and other more sophisticated lending practices make their way onto the Polish market.
Pekao's Moren notes that though his bank offers most services, there are always areas for improvement - such as the actions the firm took earlier this year to reinvent its mortgage house.
"We develop our products all the time," he says. However, he declined to say what future changes to the firm's offer might be.
The current ways companies distinguish themselves is in the area of currency. Except under special circumstances, Pekao only offers mortgages in złoty, whereas PKO has a portfolio of some 80 percent złoty and 20 percent Swiss francs. Moren said that the only exceptions Pekao would make for offering other types of loans would be if a client was paid in another currency.
Despite the reticence about future products, those in the market generally expect growth of anywhere from 20-40 percent. Moren points out that critics expected mortgage market growth to fall off precipitously directly following accession. However, this has not yet occurred. "We just don't see it," he says.
What has occurred, though, is increased competition, concludes Szeski. And in this market, he explains, the spoils will not only go to the largest banks, such as PKO or Pekao. "It's not only size that matters," he says, noting there's room enough for banks of all stripes.
The country's largest banks, PKO BP, and its largest listed bank, Pekao SA, are at the forefront of the mortgage market, with smaller niche-oriented firms, such as GE Money Bank, making inroads as well.
"Looking at the broader picture," says Robert Moren, spokesman at Pekao SA, "the entire market has taken off because of the Polish economic improvement as a whole."
He explained that a lot of the economic growth from last year came from exports and that has translated into a greater number of Poles with cash on hand. And, as often occurs, people look to invest in real estate when a steady stream of income is foreseen. "They are now able to invest in real estate," Moren says. "There are resources for people now."
On that information, he explains that Pekao improved its mortgage offering this February. "We have changed our offering so it's more focused on clients' needs," he says.
He explains that, today, "simplicity" is the watchword for Pekao - more than ever before it's easier for consumers to get a mortgage with the bank.
He boasts that in one day a potential client - without documentation - can find out exactly how much he or she could borrow, and that within eight days, documentation permitting, a customer can have a deal signed and sealed. "All he needs to bring is documentation of land and how much he earns," he points out. At that point, a consumer is guaranteed a first year interest rate of 5.55 percent; the following years are based on a negotiated rate above WIBOR. Once negotiated, that rate stays constant.
These rates are a far cry from what they used to be, as Moren explains that, in 2001, Pekao lent at 18 percent, which, owing to the small size of the market then, was prohibitive. The results have been very positive. In the first quarter of last year, the bank recorded zł.110 million, compared to a whopping zł.288 million in the same period this year.
And if analysts have much to say about the issue, Pekao numbers are expected to increase still further. "The market has already taken off," notes Artur Szeski, analyst at CDM Pekao, referring to the fact that the upward trend did not start yesterday. "And if we look at mortgages per head, it's still very low compared to in other countries. So the outlook is positive."
However, this environment of conspicuous opportunity lends itself to increased competition. "Everyone is trying to offer mortgages," he says. And, as such, even though margins are fatter than in other EU countries, they are beginning to feel the pinch of competition, as larger banks, whose sheer scale offers advantage, battle it out with smaller banks, whose niche products allow them a place in the market. "The margins are definitely under pressure," he says.
PKO, for one, does not feel the pressure just yet, at least according to Justyna Gałbarczyk, managing director of the bank's real estate financing division.
Gałbarczyk chalks up the success of the relatively new market to interest rates. The bank, at present, offers a host of different mortgage loan types at around six percent. But besides the interest rates, she points to the fact that Warsaw in particular has too few flats. "So basically it's a necessity," she says.
Poles whose private incomes are growing are investing in new property, erecting new buildings or just refinancing existing holdings. She adds, too, that new tax regulations are facilitating the growth.
As this market is growing, Gałbarczyk says that it is almost as mature - in terms of loan types offered - as the longer-standing Western markets. "We have everything," she boasts of the PKO product offering.
Like a lot of other banking peers, PKO offers the gamut of services in the primary and secondary markets. The only difference between East and West, she says, is maybe that banks here don't offer reverse mortgages. These are mortgages aimed at lower income individuals, or pensioners, whereby a homeowner borrows against their home equity and receives regular tax-free payments.
But it's only a matter of time before reverse mortgages and other more sophisticated lending practices make their way onto the Polish market.
Pekao's Moren notes that though his bank offers most services, there are always areas for improvement - such as the actions the firm took earlier this year to reinvent its mortgage house.
"We develop our products all the time," he says. However, he declined to say what future changes to the firm's offer might be.
The current ways companies distinguish themselves is in the area of currency. Except under special circumstances, Pekao only offers mortgages in złoty, whereas PKO has a portfolio of some 80 percent złoty and 20 percent Swiss francs. Moren said that the only exceptions Pekao would make for offering other types of loans would be if a client was paid in another currency.
Despite the reticence about future products, those in the market generally expect growth of anywhere from 20-40 percent. Moren points out that critics expected mortgage market growth to fall off precipitously directly following accession. However, this has not yet occurred. "We just don't see it," he says.
What has occurred, though, is increased competition, concludes Szeski. And in this market, he explains, the spoils will not only go to the largest banks, such as PKO or Pekao. "It's not only size that matters," he says, noting there's room enough for banks of all stripes.
