Polands transition from a State run economy to a market based economy has been hailed as one of the best transitions made since the break up of the USSR. There are some lingering issues not uncommon to any emerging country with Poland tackling each as they find it best suits their long term time schedule. One of the market sectors that is currently in a transition is the financial services market. Lending is occurring with little problem as critical institutions are slowly given more latitude in how they operate. In the banking world this is best illustrated by the offering of up to a 20 percent share of some Polish banks. As these banks begin to offer stock they are and will continue to offer mortgage loans and other financial services. Current loan opportunities include:
Stage payment financing
Commercial financing
Re-mortgage
Capital re-payment mortgage
Interest only mortgages up to three years
How will banking grow?
How the banks are received in the stock offering is still in question and may have a more conservative affect on current rates as the banks continue to offer interest rates at well below average rates of the countries neighbors and the European Union in particular. Current rates are 3.21 percent CHF and 4.8 percent EUR.
There are other interesting items that find Poland's financial institutions varying slightly from more standard forms of mortgages documentation requirements. The overall requirements include:
Completed application
Self declared self worth statement
P60 or three years audited accounts if self-employed
Copy of passport
Letter of recommendation/ references from bank
Bank statements for six months
Credit card statements for six months
Evidence of rental income
In Polands particular instance the Bank account requirement is a rather critical element of the mortgage process. This requirement is important because the repayment of the loan will be automatically deducted from the account by the bank. This is not usually done elsewhere around the world.
Watch rental income closely
One particular area where one may want to pay attention in the mortgage process is if the mortgage is for rental property. Unemployment is among the highest in the European Community and is further exacerbated by the drain of intellectuals to other neighboring countries. Reaching just past 19 percent at the end of 2006 this drain is having profound effects on middle class incomes as research and development positions dry up due to the lack of skilled employees and a drain on funding. Once more Poland is finding a growth of unskilled information oriented employees that should be slated to fill positions in an expanding information technology economy. Ultimately this will, if it has not already, lead to lower rents and a more difficult time meeting mortgage payments.
Poland is making the structural changes that are needed for the country's long term growth. Their remarkable changes made as they began the process have been successful to a very large degree due to the speed with which they were made. If, as the country opens more strategic industries for investment with that same zeal middle class incomes should return as the investment flows in. If not, rental incomes may not match expectations and mortgages could wind up in peril. At the moment it is a wait and see game which nobody involved wants.
Author Resource:-
Leo Fogarty is Marketing Director of the mortgage specialists Euromortgage. He is also a regular author for financial magazines, most notably Property Gallery Magazine in Ireland and is an expert on mortgages, remortgages, equity releases and overseas mortgages.
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