Loan for 23 years, repayment in 10 years. Poles are massively overpaying

In 2026, the level of early repayments and overpayments of housing loans may be higher than in 2025, when it amounted to approximately PLN 55 billion. The high level of overpayments means that despite the growing net sales of loans, the growth of the loan portfolio will be limited – Tomasz Pawlonka, director of the Research and Analysis Team of the Polish Bank Association, told PAP Biznes.

“In 2025, the level of early repayments and overpayments amounted to approximately PLN 55 billion compared to PLN 51.7 billion a year earlier, i.e. increased by approximately 6% year-on-year. In 2026, their scale may be even higher, especially if the good situation on the labor market continues and at the same time further rate reductions will favor the refinancing of loans,” Pawlonka told PAP Biznes.

“The consequence of the high level of overpayments is a slower growth of the housing loan portfolio – both in nominal and real terms. With the annual supply of housing loans at the level of PLN 90.5 billion (excluding refinanced and consolidated loans), the active portfolio of housing loans increased by PLN 28 billion, and in real terms (and therefore in relation to GDP) it even decreased (by 0.16 pp. of GDP)” – he added.

The director stated that Currently, overpayments and early repayments clearly limit the growth rate of the housing portfolio. He informed that in 2025, the supply of PLN housing loans reached PLN 90.5 billion, but at the same time, early repayments and overpayments remained at the level of approximately 60%. new production, which means that a large part of the new sales did not translate into an increase in the net portfolio.

He added that this is also visible in the repayment structure – loans taken out on average for over 23 years are actually repaid on average in about 10 years (at the current level of overpayments). Before the pandemic, a housing loan taken out for a period of 20-23 years was repaid within 13-14 years.

The director assessed that households, after experiencing high interest rates, are now trying to actively manage their debt and limit its costs through overpayments.

“Secondly, the importance of refinancing and consolidation is growing, which artificially increases the volume of new production, but does not increase the real debt of households,” Pawlonka said.

“According to ZBP estimates, consolidated and overpaid loans constitute approximately 18% of the new production of housing loans (which is why some data show that the supply of housing loans in 2025 exceeded PLN 105 billion)” – he added.

In his opinion, the mechanism of borrowers' reaction to changes in interest rates is very important and, as research shows, decisions on prepayments are non-linear and are strongly correlated with the cycle of interest rate changes.

The director assessed that the ratio of repayments and overpayments to new loan production remains high – in recent years it was around 60%, while before the pandemic it was in the range of 30-40%.

“In 2026, this indicator may decline slightly if new production grows faster than repayments, but it is difficult to expect a return to the levels from a few years ago because borrowers' behavior has changed permanently,” Pawlonka said.

He assessed that the process of overpayments and early repayments would also be facilitated by the environment of significantly lower interest rates.

The director drew attention to the change in the structure of the credit market, i.e. the growing share of loans with periodically fixed interest rates, which currently amounts to 40%. wallet.

“This is a fundamental change, because in the case of variable-rate loans, early repayment does not generate such significant costs for the bank, while in the case of periodically fixed-rate loans, the situation is completely different. The bank secures such loans with market instruments, and early repayment means the need to close the hedging position and a real economic cost,” said Pawlonka.

He recalled that the banking sector, together with the Polish Bank Association, pointed out that the lack of an effective prepayment compensation mechanism leads to costs being transferred to the entire customer portfolio.

“Banks, not being able to precisely recover the costs of early repayment, include this risk in the loan price, which means that all borrowers pay higher interest rates, regardless of whether they make overpayments or not,” Pawlonka said.

Sebastian Karbarczyk (PAP Biznes)

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