Credit holidays will be extended? Bank rates down sharply

The government plans to extend the statutory credit holidays at least until the end of 2024, the money.pl portal reported. The exchange rates of banks listed on the Warsaw Stock Exchange strongly reacted to these reports. A government spokesman commented on the case.

At the end of trading on Wednesday, the WIG-Banki index lost 4.09 percent. Financial institutions were the most declining WIG20 companies: mBank (-4.76%), Pekao (-4.67%), Santander (-3.82%) and PKO (-4%). The declines took place with high turnover, which for the industry index amounted to PLN 582 million, accounting for 47 percent. the entire market. In the banking basket, the shares of Millennium (-6.73 percent) and BNP (-5.28 percent) fell the most.

“We hear that credit holidays will be extended and we have no doubt that this will happen. We expect it because the election campaign is in full swing and people need to be given something,” says a representative of the banking sector, who wishes to remain anonymous, in an interview with Karolina Wysota. In turn, a person close to the prime minister points out that for the time being it is a “loose idea” and “no binding decisions have been made”.

“The extension of the credit holidays will depend on the level of interest rates, decisions will be made in the middle of the year – said government spokesman Piotr Muller at the briefing, PAP informed after 9:30. “We will see what the situation will look like. The solutions are approved for this year. We’ll see how interest rates develop. If rates go down, no extension will be needed.”

Currently, economists do not expect interest rate cuts. NBP in the first half of the year, but at the earliest in the last quarter of the year. We are already observing a decline in market rates – in November wibor3m exceeded 7.6 percent. against 0.2 percent before the start of the monetary policy tightening cycle by the MPC. Currently, the rate has already decreased by 1 percentage point. lower.

The president of the Polish Development Fund, Paweł Borys, also referred to the matter. “Information on credit holidays is pure speculation without foundations according to the position of government spokesman Piotr Muller. The program lasts 2 years and there are reasons to expect a decrease in interest rates in 2024, which should have a positive impact on the situation of borrowers. So it looks like fake news at the moment” he wrote on Twitter.

information @Money_pl on credit holidays is pure speculation without any basis according to the position @PiotrMuller. The program lasts for 2 years and there are reasons to expect a decline in interest rates. in 2024, which should have a positive impact on the situation of borrowers. So now it looks like #fakenews https://t.co/OR0w0SRacs

— Pawel Borys (@PawelBorys_) January 25, 2023

Poles are happy to use credit holidays

Credit holidays are the government’s idea to relieve borrowers as a result of interest rate increases. This year, you can use the deferral of four installments, one in each quarter (last year it was also four installments). The solution can be used by people who repay a mortgage loan taken out for their own housing needs in the Polish currency before July 1, 2022. The loan period will be extended by the number of months for which repayment of installments was suspended.

By state at the end of December, credit holidays covered 1.05 million loans with a total value of PLN 262.5 billion – said government spokesman Piotr Müller. That’s 54 percent. the number of all zloty housing loans in Poland and 68 percent. their total value.

The ruling majority decided to introduce the program after the Monetary Policy Council began to quickly raise interest rates in a (late) reaction to accelerating price increases. From October 2021 to September 2022, the NBP reference rate was increased from 0.1 percent. up to 6.75 percent Following the expected increase in the cost of money, market rates increased at the central bank, including those directly affecting the interest rate on housing loans, i.e. the above-mentioned WIBOR.

Banks versus credit holidays

Banks listed on the Warsaw Stock Exchange have had a three-month rebound period. During this time, the sector index increased by over 35 percent, returning to levels of over 7,000 points for several sessions.

Credit holidays have a negative impact on the results of banks. According to Michał Kubicki’s analysis, in Q3 9 institutions listed on the Warsaw Stock Exchange indicated that they were charged PLN 12.8 billion on this account. The highest costs related to PKO BP and Pekao, and the lowest to Bank Handlowy.

Maciej Kalwasinski, Daria Onisk

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