PKO Bank Hipoteczny has received approval from the Financial Supervision Authority, completing the last formality and clearing the way for the lender to begin operations. Starting on 1 April, it will offer residential mortgages through PKO Bank Polski’s branch network. The development of mortgage banks is an important step toward a reordering of Poland’s mortgage market.
Residential mortgages have been offered in Poland on commercial terms for about 20 years, with the range of products shifting in line with changes in demand. After the era of foreign-currency mortgages and floating-rate złoty credits, the time has come for loans offered by specialised mortgage banks. Thanks to stable financing, in the future they may evolve in the direction of fixed-rate mortgages, which would eliminate the interest-rate risk that is a key element today. While this is already the standard on global markets, for Poland it is still in the future.
“Mortgage banks are a solution for bringing order to Poland’s market for mortgage loans,” said Zbigniew Jagiełło, president of PKO Bank Polski, the parent of PKO Bank Hipoteczny. “They guarantee safety through long-term financing by covered bonds, most often paying fixed interest rates. They also have a greater ability to eliminate the risk on the client side that arises from swings in property prices.”
PKO Bank Hipoteczny was established last year, and is now beginning operations. Since 1 April it has offered residential mortgages through PKO Bank Polski’s branch network, and through selected intermediaries. The bank offers złoty-denominated loans for individual borrowers. The product structure is the same as that of the Własny Kąt (Space of Your Own) mortgage offered by PKO Bank Polski. Clients applying for residential mortgages submit a single application, which is sent to both banks. After initial checks, the application is reviewed simultaneously by both lenders. If the mortgage bank approves it, the client signs an agreement with PKO Bank Hipoteczny at a PKO Bank Polski branch. The sales and post-sales processes are also provided by PKO Bank Polski.
“The launch of operations by PKO Bank Hipoteczny is a milestone in the implementation of the PKO Group’s strategy,” said Rafał Kozłowski, president of PKO Bank Hipoteczny. “Based on the loans we have granted, in the second half of the year we’ll carry out our first issue of covered bonds. Our ambition is to set the pace on Poland’s mortgage market, ensuring prosperity for ordinary Poles and bolstering the Group’s financial stability.”
The growth rate of Poland’s mortgage banks will depend on the amendments to the law on covered bonds and mortgage banks which the government is now working on. The reform will make it easier to offer covered bonds not only in Poland, but first and foremost on foreign markets, which today isn’t possible. Potential buyers of these instruments are mutual funds, pension funds, insurers and other banks.