Not so long ago when discussing the rules for granting mortgage loans, the recommendation of SII was mentioned. Currently, however, we hear more and more in the media about SIII. Below you will find information on the differences between SII and SIII and why they were introduced in our country at all.
The banking sector is systematically influenced by new recommendations including recommendations of the Polish Financial Supervision Authority on ensuring greater security for banks while maintaining a mutually beneficial relationship between the bank and its clients. The main security resulting from the introduction of such recommendations is the limitation of the level of risk under the credit policy.
Quality of Information
The first recommendation that was introduced in our country was S. It was not until the end of 2008 that an amendment named SII was introduced. The assumption of this amendment was to improve the quality of information policy conducted by banks as part of granting loans in foreign currencies. Banks were then obliged to provide their clients with detailed information on the risks associated with taking out this type of loans and about the additional costs that will be incurred as a result of currency differences. SII also introduced a limitation between the buying and selling rates of foreign currencies conducted by banks operating in Poland. As a result, bank customers could repay their loans in the currencies in which they were granted and did not have to use exchange rates imposed by banks.
The next addition to the S recommendation and its SII amendment is the recommendation with the SIII symbol. Its main assumptions came into force at the beginning of 2012. It differs from its predecessors mainly because it brings privileges for banks, not for clients. At the same time, various restrictions will be introduced for borrowers. First of all, the procedures related to the creditworthiness of applicants for credit will change. The maximum perspective for creditworthiness testing will increase to 25 years. The length of the loan will not decrease and you will still be able to take a loan for up to 50 years, but the creditworthiness will already be determined in much shorter perspectives. In addition, if the term of the loan is even slightly overlapping with the bank’s retirement age, the bank institution will have the right to take into account the probable decrease in the customer’s revenue.
In the near future there will also be changes in the indicators determining the relationship between the borrower’s earnings and current liabilities to banks and other institutions involved in borrowing money. The restrictions will apply to both foreign currency and PLN loans. For now, with loans in zloty, the current levels will not change, however with foreign currency loans, one level will be set – 42%. This is not good news for clients of banks, as the fixed level means nothing else than the fact that the client’s expenses for liabilities in foreign currencies can not exceed 42% of the total net income.
As you can see, the amendments related to the SIII recommendation will not be taken too well by the borrowers. Fewer people will be able to apply for a loan due, inter alia, to banks taking into account the amount of income after reaching the retirement age by borrowers and as a result of lowering the debt ratio with foreign currency loans. Many people in this situation may face the need to take an unfavorably interest-bearing loan in private institutions that are not banks.