Rising impairments in Non-QM and DSCR mortgage segments amid market shifts

Non-qualified mortgages (non-QM) and debt-service coverage ratio (DSCR) loans have shown increasing impairment rates over the past two years, despite ongoing cash flows and relatively low losses. According to recent analysis, this trend reflects broader pressures from inflation, rising mortgage rates, and varying borrower profiles.

The DSCR loan segment—used primarily for rental property financing—now represents over half of the securitized non-QM loan market. While delinquency levels in these and other non-QM loans have doubled since 2022, performance remains stable relative to traditional prime and credit risk transfer (CRT) pools. This divergence is largely due to distinct loan features and borrower characteristics.

Recent data highlights that loan attributes such as credit scores and loan balances are more predictive of impairments than loan-to-value (LTV) ratios or DSCR alone. Lower FICO scores and larger loan amounts show a higher likelihood of delinquency, particularly in loans below 700 credit score thresholds. Despite this, the average original LTV for impaired loans has remained around 70%, helping limit loss severity.

Loan performance also varies by size, with higher-balance loans generally showing greater impairment rates. In the non-QM segment, loans in the $700,000 to $1 million range saw impairment rates up to 3.7%, while DSCR loans of similar size experienced 4.3%. However, losses upon default remain limited due to sustained home price appreciation and the ability of many borrowers to repay through property sales.

Transition data suggests that many delinquent loans either cure or are prepaid within six months, particularly those only 30 or 60 days overdue. Losses have been minimal even in loans that reached 90+ day delinquency, with average severities near 1.5% across both non-QM and DSCR loans.

Regional variations exist, with concentrations of non-QM loans in California, New York, Texas, and Florida. However, higher property prices in these states have not consistently correlated with higher loss rates.

Looking forward, the outlook remains cautious. While the housing market continues to support loan performance, growing affordability concerns and a potential uptick in unemployment—forecasted to reach 4.5% by year-end—could pressure future repayment capacity. Additionally, rising property taxes and the expiration of student loan forbearance may further strain borrowers.

Despite higher impairment levels, continued home equity strength and conservative LTVs suggest that losses may remain contained for now. However, analysts will be closely watching economic developments and housing trends for signs of further stress in the non-QM and DSCR mortgage segments.

Sources: S&P

Average gross monthly wage in Poland’s enterprise sector reaches 8,736.49 PLN in Q1 2025

According to an official announcement from Statistics Poland, the average gross monthly wage and salary in the enterprise sector reached 8,736.49 PLN in the first quarter of 2025. The figure reflects the total earnings before tax and social security contributions, including basic wages, bonuses, and other financial benefits.

This data provides a key indicator of income trends within Poland’s business sector, which includes medium and large enterprises employing more than nine people. The reported amount is a nominal average and does not account for inflation or regional income differences.

Compared to the same period last year, the wage level indicates continued growth in earnings, which may be influenced by several factors. These include inflation-driven wage adjustments, growing labour demand in various industries, and increases in minimum wage levels introduced at the beginning of the year.

Labour market analysts are closely monitoring wage developments in the context of Poland’s broader economic conditions. The increase in average wages contributes to higher consumer spending potential but also raises questions about labour costs and productivity in key sectors.

The wage growth is also viewed in relation to ongoing discussions about labour shortages and wage pressures in specific industries such as construction, manufacturing, and IT. Economists suggest that while rising wages may support household income and reduce wage inequality, sustained wage growth needs to be aligned with productivity improvements to maintain competitiveness.

CPK approves key planning stage for Sieradz–Poznań high-speed rail link

Centralny Port Komunikacyjny (CPK) has approved the Program and Spatial Concept (KPP) for Railway Line No. 85, advancing plans for the high-speed rail connection between Sieradz, Kalisz, Pleszew, and Poznań. This section forms part of the “Y” line, a strategic infrastructure project linking Warsaw, CPK, Łódź, Poznań, and Wrocław.

The approved KPP outlines preliminary technical and spatial assumptions, including new tracks and stations, and serves as the foundation for construction design. With this milestone reached, CPK is beginning the next stage of work: developing the construction design, scheduled to continue through the third quarter of 2026. The company aims to submit a construction permit application by the end of that year, with construction expected to begin in early 2028. The line is projected to be operational by 2035.

Environmental permit applications for the 146-kilometre route have already been submitted. The design speed for passenger trains on this segment is 350 km/h. Once completed, the high-speed line will cut travel time between Warsaw and Poznań to 1 hour and 38 minutes.

This route forms part of the Trans-European Transport Network (TEN-T), a European Union initiative aimed at enhancing cross-border transport and integration. Funding of PLN 162 million for the Sieradz–Poznań section was secured through the EU’s Connecting Europe Facility (CEF2), underlining its significance for regional and European mobility.

The project is being developed by CPK in collaboration with the BBF and IDOM engineering consortium.

Catella and Barings launch affordable housing project in Copenhagen

Catella has partnered with Barings, a global real estate investment manager, to develop an affordable housing project in Herlev, a suburb of Copenhagen. The project, called Vega, will deliver 269 apartments and aims to address local housing demand while meeting high environmental and social standards.

Vega will incorporate low-emission materials, energy-efficient systems, and infrastructure for electric vehicles and shared mobility. It is designed to support multi-generational living and promote long-term affordability.

This collaboration marks Barings’ first real estate investment in Denmark. Andreas Norberg, Head of Nordics at Barings, highlighted the value of working with a local partner experienced in Copenhagen’s residential sector.

Vega is located next to Catella’s earlier development, GreenPoint, a 445-unit residential complex scheduled for completion in late 2025. GreenPoint has received both DGNB Platinum and WiredScore Home Platinum certifications, reflecting high standards in sustainability and digital connectivity.

The project is part of Catella’s Principal Investments strategy, which focuses on equity investments, co-investments, and partnerships to grow assets and recurring revenue.

Z2 office refurbishment highlights sustainable construction in Stuttgart

ZÜBLIN has completed the refurbishment of its corporate building, Z2, located in Stuttgart-Möhringen. The six-storey structure, known for its curved facade design, underwent an 18-month renovation aimed at reducing operational carbon emissions and improving energy efficiency. The project is part of the STRABAG Group’s broader goal of achieving climate neutrality by 2040.

The refurbishment included the use of CO₂-neutral in-situ concrete for structural components, rock wool insulation made from natural stone, and facade elements containing approximately 65% recycled aluminium. A green facade was also installed, designed to help improve air quality, reduce noise, and filter dust. The greenery is irrigated via a 60,000-litre underground rainwater tank.

The building’s energy supply combines a four-wire heat pump system capable of heating and cooling, as well as rooftop photovoltaic panels and battery storage units. An electric vehicle charging infrastructure was also included.

The project makes use of Pilkington Mirai™, a low-carbon glass designed to meet energy performance standards while reducing the environmental impact of glass production. Combined with other Pilkington products, the glass contributes to the nearly zero-energy status of the building.

In addition to reducing its operational footprint, Z2 incorporates recycled materials and is part of a pilot initiative, renew:glass, which reintroduces used glass from the building into the manufacturing cycle. This approach supports circular economy goals in construction.

ZÜBLIN worked with several partners on the Z2 project, including Flachglas MarkenKreis, Johann Schirmbeck GmbH, and Forster Fassadentechnik GmbH. The building serves as a case study in adapting existing properties to meet modern sustainability and energy efficiency standards.

Eurozone budget deficit falls to 3.1% in 2024, imbalances remain

In 2024, the Eurozone recorded a reduced government budget deficit relative to gross domestic product (GDP), falling to 3.1% from a revised 3.5% in 2023. The improvement reflects a combination of stronger fiscal revenues and moderate expenditure control across the 20-member bloc. Despite the overall decline, fiscal pressures remain unevenly distributed, with twelve countries still posting deficits equal to or exceeding the European Union’s recommended limit of 3% of GDP.

According to recent data from Eurostat, only six member states posted a budget surplus or maintained their deficits below the 3% threshold. Denmark led with a surplus of 4.5% of GDP, followed closely by Ireland and Cyprus at 4.3% each. Greece, Luxembourg, and Portugal also reported surpluses or modest fiscal positions, underscoring efforts by some governments to consolidate public finances after years of pandemic-related spending.

In contrast, several larger economies continued to struggle with significant budgetary gaps. Romania posted the largest deficit at 9.3% of GDP, followed by Poland at 6.6%, France at 5.8%, and Slovakia at 5.3%. These levels far exceed the Stability and Growth Pact criteria, raising concerns about the medium-term sustainability of public finances in these countries.

The overall government expenditure in the Eurozone reached 49.6% of GDP in 2024, up from 48.9% in 2023. The increase was largely driven by continued public investment, social spending, and efforts to mitigate the effects of inflation on households and businesses. Meanwhile, government revenues also rose to 46.5% of GDP, supported by higher tax receipts, strong labour market performance, and a rebound in corporate earnings in several countries.

Analysts note that the narrowing of the deficit at the Eurozone level is a positive signal, but the divergent trends among member states highlight challenges in fiscal coordination. With economic growth slowing and uncertainty surrounding global trade and geopolitical risks, governments may face increased pressure to balance support for economic activity with fiscal discipline.

Żabka signs €35 million contract for new logistics center near Łódź

Żabka BS, a subsidiary of the Żabka Group, has signed a general contracting agreement with Dekpol Budownictwo for the construction of a new logistics center near Łódź. The contract, valued at approximately €35 million, covers the design and construction of a 42,000-square-meter facility.

The logistics center will be developed on undeveloped land owned by the Żabka Group in central Poland. According to the company, the project is scheduled for completion in the second half of 2026. The agreement also includes provisions allowing Żabka to exclude certain works from implementation or request additional or replacement work.

This project will be the third logistics center developed by Żabka in the investor model, following earlier facilities in Małopole near Warsaw, which began operations in 2022, and Kąty Wrocławskie near Wrocław, completed in early 2025. The new facility is expected to become operational in 2027.

Żabka operates a leading convenience store network in Poland, based on a franchise model. The company also manages a network of unmanned stores under the Żabka Nano brand and has developed digital services as part of its expanding retail ecosystem.

Housing prices in Poland stabilizing, slight increases expected in coming quarters

The growth rate of housing prices in Poland has slowed significantly, and the market appears to be stabilizing, according to the latest report from the Polish Economic Institute (PIE). In the coming quarters, analysts expect either a slight increase in prices or continued stability.

In the first quarter of 2025, the average sale price for apartments in Poland’s 16 provincial capitals and Gdynia rose by 2.1% year-on-year on the secondary market and by 3.9% on the primary market. These figures represent a clear slowdown, particularly when compared to the second quarter of 2024, when secondary market prices rose by 23.5% annually. During the same period, wage growth outpaced housing prices, with real wages increasing by around 5%.

Some of the steepest slowdowns were observed in cities that had previously experienced rapid price growth. In Kraków, sale prices declined slightly by 1.4% year-on-year on both the primary and secondary markets. In Warsaw, prices rose modestly—1.8% on the primary market and 0.1% on the secondary market—following year-end increases of nearly 30% in both cities.

According to Tomasz Mądry, senior analyst at PIE, housing prices in the upcoming quarters are expected to rise slightly or remain stable. He notes that the Monetary Policy Council is signaling potential interest rate cuts of up to 100 basis points, with the first move possibly coming in May. This could support increased demand for housing loans, which already rose 15 percentage points in the first quarter of 2025 compared to the 2024 average. At the same time, the supply of new developments has increased, particularly on the primary market, which could help keep prices from accelerating further.

Rental prices also showed moderate growth. In seven major cities, rents increased by an average of 2.2% year-on-year, consistent with trends from previous quarters. For medium-sized apartments (40–60 m²), which account for a large share of listings, average rents reached PLN 2,700 per month in six cities outside of Warsaw and PLN 3,700 in the capital. Rental prices for large apartments (over 90 m²) fell significantly, with average rents dropping below PLN 10,000 per month. The drop was driven by a substantial increase in available listings for larger flats, especially in Warsaw, where supply in this segment grew by more than 300%.

Despite a general increase in rental demand, the total number of available rental listings declined for the third consecutive quarter. In the first quarter of 2025, rental listings in the seven monitored cities dropped by 8% year-on-year, with a 6% decrease in Warsaw and a 10% average decline in the other cities.

In comparison with other Central and Eastern European cities, housing price increases in Poland remained relatively low. In the first quarter of 2025, annual price growth in major Czech cities such as Liberec (25%), Brno (13%), and Prague (10%) exceeded those in any large Polish city, none of which saw growth above 6%. Hungary’s capital, Budapest, also recorded a 16% increase. Estonia saw the lowest price changes in the region, with Tallinn and Tartu recording price fluctuations around 2%.

According to Jędrzej Lubasiński, senior sustainability analyst at PIE, the Czech Republic continues to lead in regional housing costs. Prague was the most expensive city in the first quarter of 2025, with average prices reaching €5,800 per square meter. Other high-priced cities included Brno (€4,800), Bratislava (over €4,000), and Warsaw (€4,200). In other Central and Eastern European capitals, average prices ranged between €2,200 and €4,000 per square meter.

Prices of apartments, houses, and rents continue to climb in the Czech Republic

Property prices and rental rates across the Czech Republic have continued to rise in early 2025, with data showing an average annual increase of at least 10 percent across apartments, houses, and rents. According to an analysis by the real estate platform Bezrealitky.cz, the price of older apartments rose by 13 percent year-on-year in the first quarter, and by three percent compared to the previous quarter. The average cost reached CZK 103,473 per square meter nationwide.

Rental prices also saw notable growth, increasing by 11 percent compared to the first quarter of 2024 and two percent over the previous quarter. Meanwhile, the average price of family houses rose by around 10 percent both year-on-year and quarter-on-quarter.

In Prague, apartment prices increased by four percent from the previous quarter and by 12 percent year-on-year, with the average price per square meter reaching CZK 139,715. Rents in the capital remained largely stable compared to the end of 2024, averaging CZK 405 per square meter. Prices for family houses in Prague declined slightly on a quarterly basis but were still 12 percent higher year-on-year, reaching CZK 110,578 per square meter.

According to Hendrik Meyer, head of the European Housing Services group, buyers are showing a growing willingness to pay above-average prices for well-located brick apartments in central areas. In contrast, he noted that prices for prefabricated flats remain negotiable, with many still perceived as overpriced.

In the Central Bohemian Region, apartment prices remained unchanged from the previous quarter, while family house prices rose by eight percent, surpassing CZK 75,000 per square meter for the first time. Demand was particularly strong for homes in commuter towns such as Kladno, Beroun, and Stará Boleslav, as well as larger cities like Mladá Boleslav, Kolín, and Příbram. Areas with fast rail connections to Prague experienced faster growth in apartment prices. The average apartment price in the region reached CZK 85,179 per square meter.

Similar trends were observed in the South Moravian Region, including Brno. Family house prices there rose by seven percent quarter-on-quarter and by 12 percent year-on-year, approaching CZK 61,000 per square meter. Apartment prices in Brno grew more slowly over the quarter but increased 13 percent year-on-year, nearing CZK 100,000 per square meter. Rents averaged CZK 325 per square meter, marking a two percent rise from the previous quarter and a 10 percent increase year-on-year.

Meyer noted that many households are directing their savings toward purchasing single-family homes or building plots, partly due to the relatively slower growth in apartment prices in Brno. However, he added that further increases in rents could encourage more households to consider buying rather than renting.

Source: CTK

Electricity distributors in Czech Republic to maintain CZK 30 billion investment in grids for 2025

Electricity distribution companies in the Czech Republic will invest over CZK 30 billion in the country’s electricity networks this year, matching the level of investment from 2024. The funding will be used for network upgrades, cross-border infrastructure development, and the integration of new energy sources. According to distribution firms, investments are expected to increase further in the coming years due to growing network demands.

ČEZ Distribuce, the country’s largest electricity distributor with 3.7 million customers, plans to allocate CZK 19.2 billion to infrastructure projects in 2025. The company aims to continue efforts to modernise and strengthen its distribution system to accommodate increased connection requests, particularly from renewable energy sources. It also expects a rise in battery storage applications and will invest significantly in digitising the network.

Among ČEZ’s key projects this year are the upgrade of the power line between the Ostrov u Karlových Varů and Vřesová substations, a new transformer station on the southwest edge of Plzeň (CZK 272 million), and the completed reconstruction of the Havlíčkův Brod transformer station (CZK 244 million).

EG.D, the second-largest distributor, serves the South Bohemian, South Moravian, Vysočina, and parts of the Zlín and Olomouc regions. It has also allocated CZK 8.9 billion for 2025, the same as the previous year. EG.D’s focus will be on strengthening network reliability and supporting new energy sources. Notable projects include work on very high voltage lines and upgrades in border regions, such as continuing the project at the confluence of the Thaya and Morava rivers later this year.

In Prague, PRE (Prague Energy) is responsible for the capital’s distribution network. The company plans to invest over CZK 2.5 billion in 2025, with a focus on expanding capacity. According to PRE spokesperson Karel Hanzelka, the investments will target improvements in high and low voltage cable networks, optical infrastructure, and remote monitoring systems for transformer stations. Some investments are linked to the capital’s ongoing urban development.

Distribution companies agree that current investment levels will not be sufficient in the long term. As energy demand grows and grid complexity increases, operators anticipate the need for annual investments to rise to CZK 40 billion in the coming years.