Interest rate reductions will enliven the liquidity on the real estate market

The expected reduction of interest rates by the MPC can improve financing availability and liquidity on the real estate market – believes Tomasz Tondera, partner EY -Parthenon. The reduced cost of debt service will improve the profitability of projects and help reduce the difference of expectations of buyers and sellers.

“The expected reduction of interest rates by the National Monetary Policy Council may be a real turning point for the housing market. Undoubtedly, they will affect the increase in the creditworthiness of households, which should stimulate the demand on the housing market, which has slightly decreased after the end of government support programs. Analysts of the EY economic analyzes team assess that as a result of economic slowdown, which is a consequence of the introduction of dates, average annual, average annual. Inflation in Poland may be lower by 0.4 percent

In his opinion, the reduced cost of the loan should positively affect the fluidity of institutional rental projects on the market.

“Currently, the cost of financing in PLN usually exceeds the profitability of the project, which practically prevents the financing of such an investment on the principles of Project Finance. The expected profitability of the project in the institutional rental market (PRS) varies depending on the location and market segment between 6.5 percent and 8.0 percent.” – he assessed.

According to the expert, financial markets already discount the expected interest rate reduction, which is reflected in the decrease in WIBOR rates. The decrease in interest rates by half a percentage point can improve the creditworthiness of the average household by several percent.

“Until recently, the WIBOR 3M rate, most often used to determine the loan price in PLN, was 5.8 percent after increasing the bank's margins of 2.5 percent.

“In the perspective of 2027, the decrease in interest rates expected by EY analysts may exceed one percentage point, which should affect the increase in the creditworthiness of the household by several percent. Ultimately, of course, it depends on many factors, including primarily the margin of the bank. It is possible that in the environment of falling interest rates, banks will try to improve their interest result by raising the margins.” (PAP Biznes)

Doa/ Gor/