NBP is tough on credit holidays. “Seems unreasonable”

The extension of loan holidays for this year seems unjustified in the light of the existence of the Borrower Support Fund and its planned expansion, says the National Bank of Poland in its opinion on the “Draft Act on amending the Act on support for borrowers who have taken out a housing loan and are in a difficult financial situation and the Act on crowdfunding for business ventures and assistance to borrowers.

“In the opinion of the NBP, in the light of the existence of the Borrower Support Fund and its planned extension, the extension of loan holidays seems unjustified. The NBP positively assesses some proposals for changes in the functioning of the FWK, but at the same time, in our opinion, the criteria for receiving support have been excessively liberalized. This may lead to a reduction in the supply of credit (especially for borrowers with a relatively weaker financial situation), significant costs for banks and the phenomenon of ‘moral hazard’. – we read in the NBP opinion on the draft act.

“In the opinion of the National Bank of Poland, the current criteria enable borrowers who have real problems with repaying their liabilities to receive support. However, it could be justified to take actions aimed at popularizing this instrument, for example introducing an obligation for credit institutions to regularly inform borrowers. – we read further.

A step in the right direction

The central bank estimates that defining the criteria for taking advantage of credit holidays in the project is “a step in the right direction” compared to the existing regulations. “Nevertheless, the proposed criterion, i.e. the ratio of housing loan installments to household income (RdD = 35%), differs from the criterion adopted in the FWK and seems definitely too low” – it was also written.

The NBP responded positively to the proposal to increase the maximum amount of support from the CPF to PLN 2.5 thousand. PLN per month, but there is no justification for extending the support repayment period and increasing the number of aid installments that can be waived.

At the end of last year The Ministry of Finance has submitted for consultation a project of loan holidays for 2024 (with the first payment in March), which assumes that borrowers whose installment exceeds 35% of their income will be able to suspend the repayment of the loan installment for 1 month per quarter. Assuming that the same percentage of eligible persons will benefit from the credit holidays as from the previous credit holidays, the estimated cost will be PLN 2.5 billion, as stated in the Regulatory Impact Assessment (IAS) for the project.