A temporary suspension of mortgage payments by borrowers who are strapped for cash due to rising interest rates may cost the banking sector up to PLN 20 billion (EUR 4.34 billion), the National Bank of Poland (NBP) has said.
The government has proposed the so-called mortgage vacations, a four-month suspension of payments per year, as a solution to problems some borrowers may have after the central bank’s interest rate hikes nearly doubled their monthly mortgage payments.
According to government estimations, the cost of the vacations for the taxpayers will be PLN 4 billion (EUR 0.65 billion) annually, assuming that only half of eligible borrowers decides to make use of the new measure. The banking sector will have to stomach an additional cost of PLN 8.9 billion (EUR 1.93 billion) in 2022 owing to the new legislation, the government has calculated.
But the NBP warned on May 26 that the cost for the banking sector might be much higher, up to PLN 20 billion (EUR 4.34 billion), if all eligible borrowers decided to take advantage of a vacation in 2022-2023.
The central bank also said that if the new measure was introduced with no conditions attached, it could weaken the NBP’s drive to lower inflation, which was now at 12.4%, a level not seen in more than two decades. (The First News/Business World Magazine)