What factors will affect creditworthiness in the coming months?

Below, we analyse the key factors that will have a decisive impact on creditworthiness in the coming months, and outline practical advice for borrowers.

1. Job security – a key factor in risk assessment

Banks are placing increasing emphasis on the quality and stability of a person’s income. The level of earnings alone is no longer sufficient – what matters is their predictability over the long term.

What do banks look for?

• type of employment (a permanent contract is still preferred),
• length of service with the current employer,
• continuity of income,
• industry and its resilience to an economic downturn.

Those working under civil law contracts or running their own business may face a more detailed financial analysis and, in some cases, a lower credit rating.

Conclusion:
If you are planning to apply for a loan in the near future, it is worth limiting career changes and ensuring income stability for a few months before submitting your application.

2. The size of the deposit – the growing importance of security

A deposit has long been one of the cornerstones of creditworthiness assessment, but its importance has now grown even further.

Why do banks place such emphasis on this?

• it reduces credit risk,
• it limits the LTV (loan-to-value) ratio,
• it increases the safety buffer in the event of a fall in property value.

The standard minimum down payment is usually 20%, but in practice:

• a higher deposit can improve the terms of the loan,
• increases the chances of a positive loan decision,
• and may result in a lower bank margin.

Conclusion:
Increasing your deposit is one of the most effective ways to improve your creditworthiness and reduce the cost of financing.

3. High interest rates – pressure on creditworthiness

Following a period of low interest rates, borrowers are now facing a new reality – higher borrowing costs.

How does this affect creditworthiness?

• rising loan repayments reduce the maximum loan amount available,
• banks are applying higher safety buffers (so-called stress tests),
• creditworthiness may be lower even if income remains unchanged.

In practice, this means that many customers are now receiving lower loan amounts than they did 2–3 years ago.

Conclusion:
It is worth carefully analysing your financial situation and preparing for a more conservative approach by the bank when calculating your creditworthiness.

4. Fixed vs. variable interest rates – risk management

In times of uncertainty, there is growing interest in fixed-rate loans (most commonly with a fixed rate for a set period, e.g. 5–10 years).

Advantages of a fixed rate:

• predictable loan repayments,
• protection against further rises in interest rates,
• greater stability for the household budget.
  Disadvantages:
• usually a higher initial interest rate,
• no benefit if interest rates fall.

Banks often view the choice of a fixed rate positively, as it reduces the risk on the borrower’s side.

Conclusion:
In the current climate, a fixed interest rate can be a sensible tool for financial security, particularly for those with limited risk tolerance.

5. Other factors that may be relevant

In addition to the main factors, banks also analyse:

• current liabilities (loans, credit lines, credit cards),
• credit history,
• household living costs,
• income structure (e.g. bonuses, overtime, additional income).

It is worth bearing in mind that even small debts can significantly reduce your creditworthiness.

Summary – key takeaways:

In the coming months, customers’ creditworthiness will be largely determined by banks’ cautious approach and the continuing challenging macroeconomic conditions.

Key takeaways:

• Job security is more important today than ever before.
• A higher deposit significantly improves your chances of securing a loan.
• High interest rates limit the maximum amount of financing available.
• A fixed interest rate can be an effective risk management tool.
• Comprehensive financial preparation increases the likelihood of a positive loan decision.
• Recommendation for borrowers

Anyone planning to take out a loan should approach the process strategically:

• get your finances in order and reduce unnecessary liabilities,
• save up as much of a deposit as possible,
• ensure job security,
• consider the interest rate structure of the loan.

Careful preparation can not only improve your creditworthiness but also significantly reduce the cost of borrowing over the entire term of the loan.

autor: Leach & Lang Property Consultants