Credit holidays. What next with support for borrowers?

Luc Williams

In the draft law regarding the so-called credit holidays – prepared by the Ministry of Finance – it is proposed that this solution could be used twice in the second quarter and once in the third and fourth quarter of this year, it was stated in the regulatory impact assessment (IAR) to the draft act 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. At the same time, the RIA maintained that the cost of extending credit holidays for this year on the planned changed principles will amount to PLN 2.5 billion.

Credit holidays – what can change?

“A change is proposed to extend the validity of the credit holiday mechanism until 2024. However, due to the need to proceed with the legislative process of the project, 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 – on a monthly basis in each quarter,” it was noted in the RIA.

“It should be assumed that 420,000 loan agreements will be covered by credit holidays (assuming an RdD ratio of 35%). According to estimates prepared based on the Polish Financial Supervision Authority’s data, the maximum annual cost, assuming that 100% of eligible persons will use the instrument, is approximately PLN 6 billion. At the same time, assuming that the same percentage of eligible persons will benefit from the credit holidays as from the previous credit holidays, the estimated cost for the banking sector will be PLN 2.5 billion,” it added.

Credit holidays – what is the cost?

The total cost of the current credit holidays recognized in banks’ financial result and/or capital was PLN 12.8 billion as of September 30, 2023, it was also announced.

“The credit holidays in force so far, as at the end of September this year, covered 1.09 million PLN housing loans – for this number of loans, banks positively considered borrowers’ applications for suspension of repayment. The loans covered by the holidays accounted for 57% of the number of all PLN housing loans and 68% of the value all PLN housing loans. The total value of capital overpayments for loans covered by credit holidays, made since the loan was subject to credit holidays, is PLN 19.1 billion, which constitutes 129% of the total value of principal and interest installments that have been suspended and would be required until June 30, 2023,” it was emphasized.

Credit holidays – what criterion does the project assume?

In the target mechanism of supporting borrowers in a difficult financial situation through the Borrower Support Fund (FWK), the installment to income ratio (RdD) will be set at 40% due to the fact that further reduction of this ratio may result in a reduction in the creditworthiness of future borrowers resulting from due to the need to change banks’ lending policy. However, in the case of the so-called credit holidays – in the program only for 2024 – due to the relatively high interest rates determined by the Monetary Policy Council, further-reaching parameters are justified (RdD = 35%), as emphasized in the project justification.

At the same time, the project assumes a criterion according to which the consumer will be entitled to suspension of loan repayment if the value of the loan granted does not exceed PLN 1,200,000.

Credit holidays – when will the government deal with the bill?

Earlier, the chairman of the Standing Committee of the Council of Ministers, Maciej Berek, informed in an interview with Tok FM that due to the Cabinet Council meeting announced on Tuesday, the government would deal with the bill on loan holidays at the next week’s meeting instead of tomorrow’s meeting. He also announced that if it was not possible to adopt this act in the first quarter, a solution would be introduced in which it would be possible to recover this one installment: if the act appeared at the beginning of the second quarter, this one installment from the first quarter would be recoverable in the following quarters. intervals, perhaps already in the second quarter.

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 is PLN 2.5 billion, it was stated in the RIA for the project.


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