The government’s Youth Apartment Program debuted in the past 2014. It is addressed to young people who are under 35 years of age, both singles and families, and intend to buy their first flat from the primary market. The program helps in financing own contribution. The surcharge ranges from 10 to 20 percent. (highest if the third and next child is born).
With Loan and Credit support, you can buy a flat with a maximum area of 75 sq m and a single-family house up to 100 sq m (for families raising at least three children the limits are 85 and 110 sq m, respectively). Young people benefiting from subsidies in 2014 bought flats with an average area of 53.17 sq m, which is usually two and three-room flats. As for single-family houses, the average size was 83.97 sq m. – During the first twelve months of the program, banks concluded 13,968 loan agreements with a total value exceeding PLN 2 billion 600 million.
According to Michał Krajkowski from Good Finance Finansowi, in the fourth quarter of 2014, the share of loans granted under the “Apartment for the Young” program in 6 major cities (Gdańsk, Kraków, Łódź, Poznań, Warsaw, Wrocław) accounted for almost 15 percent of all loans granted through Good Finance Financial loans.
As expected, Loan and Credit enjoyed relatively the most popularity in Gdańsk and Poznań, where 1/3 and ¼ of loans were granted with an Loan and Credit surcharge, respectively.
In most of the locations analyzed, loans were taken out at much less favorable pricing terms, both in terms of commission and interest margins. The average margin for Loan and Credit loans in the analyzed cities was 2.02 pp and was higher by 0.08 pp than for loans without a surcharge.
Also, the commission that should have been paid for granting loans for Loan and Credit was on average 0.57 pp higher. This trend is observed in almost every city, except for the margin for loans in Łódź and Wrocław, where for Loan and Credit loans these values are slightly lower than for loans without a surcharge – comments Michał Krajkowski
Loan and Credit loans were also granted for a longer period. The average repayment period for a loan with an additional payment is 325 months and it is almost 2 years more than for a loan without a government subsidy. Interestingly, the average LTV ratio, meaning the ratio of the loan amount to the property value, was higher for Loan and Credit loans and amounted to less than 80 percent.
In the fourth quarter, loans without subsidies amounted to almost 76 percent. This means, therefore, that borrowers taking out Loan and Credit had their own down payment at a much lower level than those customers who took the loan without any additional payment. The extra charge from the budget is included in the LTV calculation.