The first half of 2014 is for Poles earning in foreign currency the last bell to take out a loan in USD. According to Recommendation S, from July 1 this year. people earning income in a currency other than our own will not be able to borrow in Polish banks. The last Recommendation S of the Polish Financial Supervision Authority changed the credit market slightly.
Most of its provisions had to be implemented by the end of 2013
However, some recommendations must be introduced by July 1, 2014. One of them is the need for the currency of the loan to be in line with the currency of the highest income. Recommendation No. 6 says that “The bank should eliminate the retail client’s currency risk by ensuring that the newly granted loans are fully compliant with the currency of the exposure and the revenue from which it will be repaid.” If borrowers generate income in different currencies, the loan must be granted in the currency of the highest income. In practice, such provisions of Recommendation S mean that many people will not be able to take out a loan in USD, and for a certain group of Poles obtaining a loan in Poland will become practically impossible.
Who will not get a loan anymore?
When analyzing the new provisions of Recommendation S, several social groups should be taken into account. Seafarers and people living in border areas but working outside Poland constitute a large group. These people usually earn in euros and after the introduction of new regulations only in this currency will be able to take out a loan. Although theoretically it will be possible to borrow in USD, e.g. if your spouse works in Poland and earns in our native currency, but in practice, due to the method of calculating income in another currency, your creditworthiness will be at such a low level that obtaining a loan in zloty it will also be very difficult. Thus, for people earning in euro, only a loan in this currency will be available. However, it is worth noting that the availability of loans in this currency is purely illusory. Currently, only 7 banks offer them, but they are very expensive loans with margins from 3.00 pp, and often exceeding 5.00 pp
While those who earn in the European theoretical currency but have a choice, those working in the UK or Norway on credit in Poland will no longer be able to count. Credit in British pounds is offered only by one bank, but we will not find a loan in NOR. This means that people who earn in these currencies will not get a loan in Poland.
What else has the S Recommendation changed?
In addition to changes regarding the compliance of the loan currency and income currency, the S Recommendation also introduced a requirement for own contribution. Each loan granted in 2014 may not be higher than 95% of the property value. In addition, the loan period may not exceed 35 years. The new regulations have also slightly liberalized the method of calculating creditworthiness. The loan period for the purpose of its calculation was extended by 5 years from the current 25 years. This translated into an increase in the amounts available by around 5-7%.