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Credit holidays. The Polish Bank Association criticizes the Third Way project. Tadeusz Białek on details

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The Polish Bank Association opposes the extension of credit holidays. This is “illusory support for people facing problems with current liquidity,” wrote Dr. Tadeusz Białek, president of the Polish Bank Association, in an opinion published on the Sejm website. In the opinion of the Association, the basic tool for assistance to borrowers should be “comprehensive instruments operating within the Borrower Support Fund”.

At the end of July 2022, the Act on crowdfunding for business ventures and assistance to borrowers entered into force, introducing credit holidays. The regulations made it possible to suspend the repayment of mortgage loan installments in PLN. The suspended installments were transferred at the end of the repayment period, thus extending the loan period.

Statutory credit holidays were to apply until the end of this year. There is a project of Polish MPs 2050-Third Way in the Sejm, which assumes the extension of the solution for another year. According to the proposal, in 2024, loan holidays would be available if the borrower’s expenses related to monthly mortgage installments exceed 40%. average monthly income.

The justification indicated that, as before, at the borrower’s request, it will be possible to suspend four installments (once a quarter) of a mortgage loan taken out for the purchase of an apartment during the year.

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On Monday, the opinion of the Polish Bank Association on the Polish 2050-Third Way project of MPs was published on the Sejm website.

ZBP on the Borrower Support Fund

President of the Polish Bank Association, Tadeusz Białek, pointed out that “the basic tool for assistance for borrowers struggling with difficulties in repaying housing loan installments should not be loan holidays, but comprehensive instruments operating within the Borrower Support Fund.”

In the opinion of the Polish Bank Association, the Borrower Support Fund “is an unjustly underestimated solution, as it provides much more favorable loan repayment facilities for borrowers than those resulting from taking advantage of credit holidays (…)”.

The Borrower Support Fund is a mechanism that provides assistance, among others: for borrowers who find themselves in a difficult financial situation and are obliged to repay housing loan installments. The support is paid for a period not longer than 36 months, and the individually determined amount of support cannot be higher than PLN 2,000. PLN per month.

Borrowers who meet one of the conditions can count on support from the FWK. They can be obtained if at least one of the borrowers was unemployed on the day of submitting the application. Another condition concerns the case in which the borrower incurs monthly costs of servicing the housing loan in the amount exceeding 50%. income earned monthly by his household. You can also count on assistance if your monthly household income, less the monthly costs of servicing the housing loan, does not exceed PLN 1,552 in a single-person household or PLN 1,200 per person in a multi-person household.

Credit holidays “illusory support”

In the opinion of the president of the Polish Bank Association, “if a borrower is struggling with difficulties in repaying principal and interest installments, the mechanism of suspending the payment of one installment in a quarter does not constitute real liquidity support for him.”

“For these reasons, in our opinion, it is not justified to introduce alternative aid instruments to the existing one, which is comprehensive and offers real support for people who, as a result of objective circumstances, find themselves in a difficult financial situation,” he pointed out.

Moreover, Tadeusz Białek emphasized that, contrary to the authors of the project, the extension of credit holidays in the form proposed by the Poland 2050-Third Way “causes real financial consequences for banks, estimated at PLN 1.05 billion.”

Białek asked “kindly to waive the extension of the credit holiday period”. He repeated that this is “illusory support for people encountering problems with current liquidity and timely settlement of housing loan liabilities.”

“Readiness for discussion”

At the same time, the Association declared “readiness to discuss further liberalization of the conditions for access to support under the Fund or increasing the amount of support so that its amount corresponds to the actual costs of servicing housing loan installments.”

Białek also pointed out that the Borrower Support Fund still has free funds of over PLN 1 billion, “which can be directed to borrowers as part of aid mechanisms.”

It is also in the Sejm the PiS government’s project to extend credit holidays.

Main photo source: Shutterstock

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