Opinion of the European Central Bank of 20 March 2023 on mortgage holidays (CON/2023/8)
Date: 2023-03-20
Institutions: European Central Bank
Subjects: financial stability

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 20 March 2023  

on mortgage holidays 

(CON/2023/8) 

Introduction and legal basis 

On  7  July  2022  the  Polish  Parliament  adopted  the  Law  on  crowdfunding  for  business  ventures  and 

assistance to borrowers (hereinafter the ‘Law’)1. 

The European Central Bank (ECB) has decided to deliver an own initiative opinion on the Law. The ECB’s 

competence to deliver an opinion is based on the last paragraph of Article 127(4) and Article 282(5) of the 

Treaty on the Functioning of the European Union since the Law concerns the task of the European System 
of  Central  Banks  (ESCB)  to  contribute  to  the  smooth  conduct  of  policies  pursued  by  the  competent 

authorities relating to the stability of the financial system pursuant to Article 127(5) of the Treaty, and the 

ECB’s tasks concerning  the prudential supervision of credit institutions  pursuant to Article 127(6)  of the 
Treaty.  In  accordance with the first sentence of Article 17.5 of the Rules of Procedure  of  the European 

Central Bank, the Governing Council has adopted this opinion.  

1. 

Purpose of the Law 

1.1  The Law, in addition to implementing and ensuring the application of a number of Union directives 

and regulations, introduced the concept of ‘mortgage holidays’ to alleviate the burden on borrowers 

with outstanding mortgage loans following the recent increases in interest rates by Narodowy Bank 

Polski. According to the explanatory memorandum accompanying the Law, an increasing number of 

borrowers bear mortgage loan servicing costs in excess of 50 % of their monthly household income.  

1.2  The Law gives consumers with outstanding mortgage loans in Polish zloty the right to suspend their 

mortgage payments for a specific period of time. Loans indexed or denominated in a currency other 

than zloty are excluded from the mortgage holiday scheme. Under the Law, a borrower may only 

suspend the repayment of a loan in relation to one contract concluded for the purpose of satisfying 

his own housing needs. To exercise this right, borrowers must simply submit a request notice to their 

lender, without any discretion for the lender to grant or not to grant the suspension. The loan period 

is extended with the period of repayment suspension. During the suspension period, borrowers are 

not required to pay principal and interest installments, except for insurance charges linked to their 

respective contracts. 

1.3  Borrowers may suspend loan repayments for: (i) two months in each of the periods from 1 August to 

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Ustawa  z  dnia  7  lipca  2022  r.  o  finansowaniu  społecznościowym  dla  przedsięwzięć  gospodarczych  i  pomocy 
kredytobiorcom (Dziennik Ustaw z 2022 r. poz.1488). 

 
 
 
 
 
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30 September 2022 and from 1 October to 31 December 2022 and (ii) one month in each quarter in 

the period from 1 January to 31 December 2023. 

2. 

Scope of the opinion 

This opinion focuses on the impact of the Law on the banking system and financial stability in the 

euro area. It does not cover the impact of the Law on Poland’s financial stability, its banking system 

or economy. 

3. 

Impact of the Law on the banking system and financial stability in the euro area 

3.1  The  Law  applies  to  credit  institutions  directly  supervised  by  the  ECB  within  the  framework  of  the 

Single Supervisory Mechanism through their operations in Poland. The Law does not prescribe any 

specific eligibility criteria to limit the scope of borrowers entitled to request a mortgage holiday, other 

than that the loan must be denominated in zloty and satisfy the borrower’s housing needs. 

3.2  Granting  concessions,  such  as  payment  holidays,  to  borrowers  facing  financial  difficulties  can 

support financial stability under certain circumstances by, for example, allowing such borrowers to 

recover  from  temporary  liquidity  shortages,  while  enabling  lenders  to  maintain  client  relationships 

and avoid selling collateral at depressed prices.  

3.3  However, widespread and untargeted payment holidays give rise to financial stability concerns. On 

the one hand, where borrowers are facing debt sustainability problems, payment holidays may delay 

the recognition and resolution  of non-performing  debt, which  increases its economic cost. On the 

other hand, if borrowers who are able to make payments benefit from a payment holiday, the negative 

financial  impact  will  unduly  reduce  bank  profitability  and  increase  uncertainty.  Reduced  bank 

profitability in turn implies reduced capacity for banks to retain earnings and thus to increase bank 

capital  needed  to  absorb  losses  and  back  future  loan  origination.  This,  together  with  increased 

uncertainty, ultimately limits prospective borrowers’ access to credit, including mortgage loans, and 

could therefore lead to adverse feedback loops between the banking sector and the real economy. 

In addition, large losses resulting from payment holidays may threaten banks’ solvency.  

3.4 

In such circumstances, uncertainties arising from the impact of the Law on credit institutions may 

potentially  decrease  the  franchise  value.  Subsequently  it  may  increase  the  difficulty  to  attract 

investors for potential equity raising or bonds’ issuances to meet capital requirements and minimum 
requirements for own funds and eligible liabilities. Had banks known in advance that such a change 

to the legislation affecting their contractual agreements with borrowers would be made, they could 

(and most likely would) have protected themselves by charging higher mortgage interest rates or, in 

the  extreme,  not  lending  at  all.  This  means  that  the  legislation  is  not  only  allowing  mortgage 

borrowers a payment holiday but that they may in fact receive a financial transfer from their lenders. 

3.5  The fact that the Law does not prescribe any specific eligibility criteria, other than that the loan must 

be denominated in zloty and satisfy the borrower’s housing needs, also raises concerns with respect 

to the purpose of the Law. In this respect, the ECB refers to its previous statements on this point 

expressed  in  a  number  of  opinions  on  draft  laws  dealing  with  the  issue  of  restructuring  foreign 

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currency mortgage loans 2. In particular, the ECB has noted that the application of certain targeted 

eligibility criteria, such as linking the right to restructure to the borrower’s actual income position, may 

be  more  appropriate.  Additionally,  governments  are  equipped  with  better  tools  to  support  the 

economy other than the mandatory restructuring of loans within the banking system, such as directly 

supporting  distressed  borrowers  or  compensating  banks  for  losses  caused  by  a  moratoria  in  the 

public interest.  

3.6 

In  this  context  of  increased  interest  rates,  the  ECB  refers  to  recent  legislation  adopted  in  other 

Member States that also aims to help borrowers meet their obligations under loan agreements linked, 

primarily, to residential properties. In particular, the legislation3 adopted in Spain provides for a code 

of good practices for vulnerable debtors at risk that credit institutions can voluntarily sign up to for a 

duration of 24 months. Pursuant to the code of good practices, borrowers may: (i) extend the duration 

of their loan repayment schedule  up to a  maximum  of  seven years; and (ii) convert their variable 

interest  rate  loans  into  fixed  interest  rate  loans.  However,  eligibility  for  the  mortgage  loan 

restructuring measures is subject to a number of criteria, including that: (i) the purchase price of the 

debtor’s  primary  residence  does  not  exceed  EUR  300,000;  (ii)  the  annual  income  of  the  debtor’s 

family unit does not exceed approximately EUR 30,000 (or higher in certain limited circumstances); 

(iii) the mortgage burden multiplied by at least 1.2 in the four years prior to the entry into force of this 

legislation; and (iv) the mortgage payments exceed 30 % of the net income of the debtor’s family 

unit 4. 

3.7  Similarly,  legislation5  has  recently  been  adopted  in  Italy  that  also  gives  borrowers  the  right  to  (i) 

extend  the  repayment  schedule  for  a  maximum  period  of  five  years  (provided  that  the  remaining 

duration of the loan at the time of restructuring does not exceed 25 years) and (ii) restructure their 

variable  interest  rate  residential  mortgage  loans  into  fixed  rate  loans.  This  right,  however,  is  also 

subject to a number of conditions, which include a maximum income threshold (EUR 35,000) and a 

capped loan amount (EUR 200,000). 

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4  

5  

See, for example, paragraph 3.1 of Opinion CON/2015/26, paragraph 3.3 of Opinion CON/2015/32, paragraph 3.2 of 
Opinion  CON/2016/39,  paragraph  3.1.1  of  Opinion  CON/2018/21,  paragraph  3.1.1  of  Opinion  CON/2019/27  and 
paragraph 3.5 of Opinion CON/2021/36. 

Spanish Royal Decree-Law 19/2022 establishing a Code of Good Practices to alleviate the rise in interest rates on 
primary  residence  mortgage  loans,  amending  Royal  Decree-Law  6/2012  of  urgent  measures  to  protect  mortgage 
debtors  without  resources,  and adopting other structural  measures to  improve  the  market of  mortgage  loans  (Real 
Decreto-ley  19/2022, de 22 de noviembre,  por el  que  se  establece un  Código  de  Buenas  Prácticas  para aliviar  la 
subida  de  los  tipos  de  interés  en  préstamos  hipotecarios  sobre  vivienda  habitual,  se  modifica  el  Real  Decreto-ley 
6/2012, de 9 de marzo, de medidas urgentes de protección de deudores hipotecarios sin recursos, y se adoptan otras 
medidas estructurales para la mejora del mercado de préstamos hipotecarios, «BOE» núm. 281, de 23 Noviembre 
2022).  
Resolution of November 23 2022 of the Secretary of State for the Economy and Business Support, which publishes 
the Agreement of the Council of Ministers of November 22 2022, approving the Code of Good Practices for Urgent 
measures for mortgage debtors at risk of vulnerability (Resolución de 23 de noviembre de 2022, de la Secretaría de 
Estado  de  Economía y  Apoyo a  la  Empresa, por  la  que se publica  el  Acuerdo del  Consejo de  Ministros  de 22  de 
noviembre  de  2022,  por  el  que  se  aprueba  el  Código  de  Buenas  Prácticas  de  medidas  urgentes  para  deudores 
hipotecarios en riesgo de vulnerabilidad, «BOE» núm. 282, de 24 Noviembre 2022). 
National budget Law for the year 2023 (Law of 29 December 2022, No 197) (Legge 29 dicembre 2022, n. 197, recante: 
«Bilancio  di  previsione  dello  Stato  per  l'anno  finanziario  2023  e  bilancio  pluriennale  per  il  triennio  2023-2025», 
pubblicata nel Supplemento ordinario n. 43/L alla Gazzetta Ufficiale - Serie generale - n. 303 del 29 dicembre 2022). 

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3.8  Portugal has adopted similar legislation6 as well. According to this legislation, credit institutions that 

provide residential mortgage credit are required to implement certain procedures when they detect 

that  borrowers  with  mortgage  loans  with  outstanding  amounts  of  up  to  EUR  300,000  are  facing 

financial difficulties due to the rise of interest rates. The regime will be in place until 31 December 

2023. More specifically, signs of deterioration in the financial capacity of the borrower are detected 

when  customers’  debt  service-to-income  (DSTI)  ratio  reaches  36 %,  as  long  as  certain  specific 

conditions are fulfilled (designated as a ‘significant worsening DSTI ratio’), or when customers’ DSTI 

simply reaches 50 % (designated as a ‘significant DSTI ratio’). If a credit institution finds a ‘significant 

worsening  DSTI  ratio’  or  a  ‘significant  DSTI  ratio’,  or  is  warned  by  the  customer  about  facts  that 

indicate a deterioration of the customer’s creditworthiness and the credit institution concludes that 

the  borrower  has the  financial capacity to  avoid default, it must propose changes to  one or  more 

elements of the credit agreement, including an extension of the repayment period, the application of 

a grace period for the repayment of the principal and/or payments of interest, the deferral of a part 

of the capital to an instalment at a future date, and/or the reduction of the interest rate applicable to 

the credit agreement for a defined time period. Credit institutions may not charge fees or increase 

the  interest  rate  on  the  credit  agreement  because  of  the  renegotiating  of  the  terms  of  the  credit 

agreement.  Credit  institutions  must  monitor  their  borrowers’  credit  agreements  permanently  and 

systematically  by  taking,  at  least  once  a  month,  the  necessary  actions  to  identify  any  signs  of 

payment difficulties 7.  

3.9  Finally, similar legislation8 was also recently adopted in Romania. While the purpose of the legislation 

is not the restructuring of outstanding residential mortgage loans, it does aim to reduce borrowers’ 

burdens, including those resulting from residential mortgage loans. Under the legislation, borrowers 

may request the suspension of payments representing capital instalments, interest and commissions 

for up to nine months. Creditors must accept such requests if, among others, in respect of natural 

persons: (i) the borrower is solvent on the date of the suspension request and there are no pending 

foreclosure procedures; (ii) compared to the similar period of 2021, there is a minimum 25 % increase 

in average general monthly expenses in the last three months prior to the suspension request, as a 

result of the price increase in the context of the current crisis; and (iii) there  are no pending  debt 

restructuring plans agreed with the creditor in the three months prior to the legislation’s entry into 

force. The legislation also applies to borrowers that are legal entities, providing for a separate set of 

eligibility criteria. In particular, such eligibility criteria include: (i) a declaration that, compared to the 

similar period of 2021, in the last three months prior to the suspension request, there was a decrease 

of at least 25 % of the average of the monthly results; (ii) a declaration that the borrower will neither 

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7  

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Decree-Law No. 80-A/2022 of 25 November 2022 (Decreto-Lei n.º 80-A/2022, de 25 de Novembro, que estabelece 
medidas destinadas  a  mitigar  os  efeitos  do  incremento  dos indexantes  de  referência de contratos de crédito  para 
aquisição ou construção de habitação própria permanente (Diário da República n.º 228/2022, 2.º Suplemento, Série I 
de 2022-11-25, Pág. 2 - 6)). 
A pre-arrears action plan already existed in Portugal (see Decree-Law No. 227/2012 of 25 October (Decreto-Lei n.º 
227/2012, de 25 de Outubro, que estabelece princípios e regras a observar pelas instituições de crédito na prevenção 
e na  regularização das  situações  de  incumprimento  de  contratos  de  crédito  pelos clientes bancários e  cria a rede 
extrajudicial de apoio a esses clientes bancários no âmbito da regularização dessas situações (Diário da República 
n.º  207/2012,  Série  I  de  2012-10-25,  Pág.  6025  -  6033))).  However,  Decree-Law  No.  80-A/2022  of  25  November 
established triggers related to the DSTI ratio (36 % under certain conditions, or 50 %). 
Emergency Government Ordinance No. 90 of 29 June 2022 (Ordonanţa de urgenţă a Guvernului nr. 90/2022 privind 
acordarea  unor  facilităţi  pentru  creditele  acordate  de  bănci  şi  instituţii  financiare  nebancare  anumitor  categorii  de 
debitori, publicată în Monitorul Oficial, Partea I nr. 646 din 29 iunie 2022). 

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distribute  nor  pay  dividends  during  the  suspension  period  and  will  not  grant  or  repay  credits  to 

shareholders or associates, as the case may be (with the exception of public enterprises); (iii) the 

borrower is not registered with the Centrala Incidentelor de Plăţi (Payment Incidents Registry) with 

respect to any payment incidents related to promissory notes or checks, in the last six months prior 

to the date of the request; (iv) the borrower is solvent on the date of the suspension request and 

there are no pending foreclosure procedures; (v) its net assets’ level is not below half of the share 

capital’s  level  according  to  the  annual  financial  statements  submitted  and  registered  with  the  tax 

authorities by 31 December 2021; and (vi) at the time of the request, there are no debt restructuring 

plans agreed with the creditor in the three months prior to the legislation’s entry into force. 

3.10  The Polish authorities are therefore invited to consider targeted eligibility criteria for the application 

of future mortgage payments holidays to limit uncertainty and risks to financial stability.  

3.11  The  impact  of  payment  holidays  on  banks’  profitability  is  further  exacerbated  by  a  scheme  under 

which  the  repayment  period  is  extended  in  accordance  with  the  number  of  deferred  instalments. 

Under  these  circumstances,  the  present  value  of  the  loan  has  decreased  due  to  the  non-

remuneration of the mortgage loan for the suspended period. 

3.12  Several  systemically  important  euro  area  banks  hold  significant  Polish  mortgage  loan  exposures. 

Therefore,  general  and  extended  mortgage  payment  holidays  as  provided  for  in  the  Law  raise 

financial stability concerns in the euro area.  

This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 20 March 2023. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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