Credit holidays postponed. Bankers hope that the issue will quietly disappear

Business Insider asked the Ministry of Finance why the loan holiday project was dropped from the government meeting last week. The regulation intended to provide relief to borrowers is fraught with great pain. Minister Andrzej Domański explained on Polish Radio that he was asked to “present additional information, additional scenarios” and assured that the government's goal is still to adopt solutions that protect borrowers in the situation of still high interest rates. However, the delay will mean that at best the law will come into force in the second quarter, although its aim is to allow borrowers to suspend the repayment of four installments this year.

Credit holidays dropped from the government meeting. What's next?

Bankers unanimously criticize the loan holidays – just as they criticized its first edition. They argue that help goes to people who do not necessarily need it, and that they bear the greatest cost of the entire operation. The fact that politicians cannot agree on the shape of the new holidays may give them hope that they will not be finally adopted, especially since inflation is falling, which should bring a reduction in interest rates soon. However, Business Insider's interlocutor from an institution involved in legislative work dispels these hopes.

— Credit holidays were initially discussed at the meeting of the Council of Ministers and will be discussed again. We are still analyzing details, including: the aid cutoff threshold is determined by the loan installment to income ratio, said an official who wished to remain anonymous. He added that the analyzed scenarios also include those leading to expanding the group of people eligible to benefit from support in the form of credit holidays.

Credit holidays. What was the first project?

The project discussed last week assumed that in the second quarter it would be possible to suspend two installments of loan payments. – IN In the attached project, the indicated periods have been changed during which the obligation to pay mortgage installments will be suspended. Due to the need to proceed with the legislative process, it is proposed that this suspension will last for two months, from April 1, 2024 to June 30, 2024, and in the case of subsequent quarters – for one month in each quarter. – wrote the head of the Ministry of Finance.

Previously, it was assumed that the suspension would last for one month, from March 1, 2024 to March 31, 2024, and in the case of subsequent quarters – for one month in each quarter.

The Minister of Finance proposed that the threshold for taking advantage of credit holidays should be set at PLN 1.2 million (previously it was proposed to be PLN 2 million). – Setting this threshold at three times the average loan value will, on the one hand, make it impossible to use the so-called credit holidays by people who do not need such support, and on the other hand – it will take into account the prices of residential real estate in large cities – explained Domański.

It was planned that the credit holidays would come into force on April 1 this year. and will apply to 420 thousand loan agreements (assuming an installment to income ratio of 35%). Their annual cost was to amount to a maximum (assuming that 100% of eligible persons would benefit from the instrument) of approximately PLN 3.6 billion. The estimated cost of extending credit holidays for the banking sector was estimated at approximately PLN 2.5 billion.

At this point, it is difficult to say which assumptions will be implemented.