Opinion of the European Central Bank of 8 April 2024 on borrower support and mortgage holidays (CON/2024/10)
Date: 2024-04-08
Institutions: European Central Bank
Subjects: financial stability

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 8 April 2024  

on borrower support and mortgage holidays  

(CON/2024/10) 

Introduction and legal basis 

On 18 March 2024 the European Central Bank (ECB) received a request from the Marshal of the Polish 

Parliament for an opinion  on a draft  law amending (1) the Law  on support to home loan  borrowers in  a 

difficult situation as it relates to the Borrower Support Fund1 and (2) the Law on crowdfunding for business 

ventures and assistance to borrowers as it relates to mortgage holidays 2 (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC 3, as 

the  draft  law  relates  to  rules  applicable  to  financial  institutions  insofar  as  they  materially  influence  the 

stability of financial institutions and markets, 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 draft law 

1.1 

Law on support to home loan borrowers in a difficult situation 

1.1.1  The Law on support to home loan borrowers in a difficult situation specifies the rules for the granting 

of, and the conditions of use of, repayable financial aid to natural persons in financial difficulties with 

a home loan (hereinafter ‘financial aid’). Financial aid is provided through a State-owned bank, Bank 

Gospodarstwa Krajowego (BGK), from a special Borrower Support Fund funded by credit institutions. 

The Law on support to home loan borrowers in a difficult situation covers any home loans that are 

secured by a mortgage arrangement, regardless of the currency in which they were granted. The 

funding  of  the  Borrower  Support  Fund  was  increased  in  2022  by  the  Law  on  crowdfunding  for 

business ventures and assistance to borrowers (hereinafter the ‘Law on mortgage holidays’). 

1  

2  

3  

Ustawa z dnia 9 października 2015 r. o wsparciu kredytobiorców, którzy zaciągnęli kredyt mieszkaniowy i znajdują się 
w trudnej sytuacji finansowej (consolidated text: Dz. U. of 2022, item 2452). 

Ustawa  z  dnia  7  lipca  2022  r.  o  finansowaniu  społecznościowym  dla  przedsięwzięć  gospodarczych  i  pomocy 
kredytobiorcom (consolidated text: Dziennik Ustaw z 2023 r., poz. 414). 
Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
 
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1.1.2  Under the Law on support to home loan borrowers in a difficult situation, financial aid may be granted 

if: (1) when applying for financial aid at least one of the borrowers is an unemployed person; or (2) 

the proportion of the borrower’s expenses allocated to paying monthly instalments of principal and 

interest  on  a  home  loan  exceeds  50 %  of  the  borrower’s  household  income;  or  (3)  the  monthly 

household income minus any monthly costs related to the home loan is lower than Polish zloty (PLN) 

1552 for a single-person household  or PLN 1200 per person for a multi-person  household (these 

amounts are subject to adjustment every three years)4. 

1.1.3  The duration of financial aid is 36 months, and the maximum amount of financial aid is equal to PLN 

2 000 per month, up to a maximum of PLN 72 000 over three years. Persons receiving financial aid 

must start to repay the funds received, at the latest, in the month following the month that marks two 

years since the last tranche of financial aid was paid out. The funds are to be repaid in 144 equal 

and interest-free monthly instalments. However, if the borrower repays 100 instalments without any 

delay the remaining 44 instalments will be cancelled.  

1.1.4  The draft law proposes to liberalise the granting of, and the conditions of use of, the financial aid. In 

particular, with respect to the eligibility criteria, the draft law proposes to: (1) lower the proportion of 

the  borrower’s  expenditure  allocated  to  paying  monthly  instalments  of  principal  and  interest  on  a 

home loan by reference to the borrower’s household income from 50 % to 40 %; and (2) increase the 

amount resulting from deducting from the monthly household income any monthly costs related to 

the home loan from PLN 1552 to PLN 1940 for a single-person household and from PLN 1200 to 

PLN 1500 per person for a multi-person household. 

1.1.5  In addition, the draft law proposes to: (1) extend the duration of financial aid from 36 to 40 months; 

(2)  increase  the  maximum  monthly  amount  of  financial  aid  from  PLN  2  000  to  PLN  3  000  and 

consequently increase the maximum over the entire duration of the financial aid from PLN 72 000 to 

PLN  120  000;  and  (3)  increase  the  number  of  monthly  repayments  from  144  to  200  with  the 

consequential amendment that if the borrower repays 134 instalments (as opposed to 100 under the 

current version of the Law on support to home loan borrowers in a difficult situation) without delay 

the remaining 66 (as opposed to 44) instalments will be cancelled. 

1.2 

Law on mortgage holidays 

1.2.1  The  Law  on  mortgage  holidays  introduced  the  concept  of  mortgage  holidays  into  Polish  law  to 

alleviate the burden  on borrowers with  outstanding  mortgage loans following several increases in 

interest  rates  by  Narodowy  Bank  Polski.  The  Law  on  mortgage  holidays  gave  consumers  with 

outstanding mortgage loans in PLN the right to suspend mortgage payments resulting from one loan 

agreement,  concluded  before  1  July  2022,  for  eight  months  in  2022  and  2023,  comprising  four 

months in 2022 and one month during each quarter in 2023. The only eligibility criteria specified in 

the  Law  on  mortgage  holidays  were  that  the  loan  must  be  denominated  in  PLN  and  satisfy  the 

borrower’s housing needs. 

4  

See Article 3(1), point (3), of the Law on support to home loan borrowers in a difficult financial situation in connection 
with Article 8(1) of the Law on social assistance (Ustawa z dnia 12 marca 2004 r. o pomocy społecznej, consolidated 
text: Dz. U. of 2023, item 901). 

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1.2.2  The draft law proposes to extend the borrower’s right to benefit from a mortgage holiday also in 2024. 

Under the draft law borrowers may suspend loan repayments for two months in the period from 1 

May to 30 June 2024 and for one month in each quarter in the period from 1 July to 31 December 

2024.  

1.2.3  The draft law also lays down eligibility criteria to limit the scope of borrowers entitled to request a 

mortgage holiday, under which this right is available to any borrower the total amount of whose loan 

does not exceed PLN 1 200 000. According to the explanatory memorandum, this amount, which is 

three times the average value of a home loan in 2023, will ensure that borrowers who do not need 

them will not use mortgage holidays and, on the other hand, take into account real estate prices in 

big cities. 

1.2.4  In addition, under the draft law, suspension of the loan repayment will only be possible for a borrower 

(1)  for  whom  the  arithmetic  average  ratio  between  expenses  related  to  servicing  the  monthly 

instalment of principal and interest on the loan and monthly household income exceeds 30 % in the 

last three months before the submission of the application for a mortgage holiday; or (2) who at the 

time of submission of such application has at least three dependent children.  

1.3   Suspension of repayment of loans granted under the Law on social forms of housing development 

1.3.1  The  draft  law  proposes  to  extend  the  right  of  social  housing  investors  to  request  suspension  of 

repayment of the preferential loan granted by BGK in accordance with the provisions of the Law on 

social forms of housing development 5. In particular, investors may suspend loan repayments for two 

months in each of the periods from 1 May to 30 June 2024 and from 1 July to 31 December 2024. 

At the same time, the draft law proposes that the suspension of loan repayments should be linked to 

the restriction on rates that may be charged by investors to the tenants living in housing constructed 

with the benefit of the preferential loan. In particular, such charges may not exceed those in force on 

31 December 2023 during the period of loan repayment suspension. 

2. 

General observation 

In March 2023 the ECB adopted an own-initiative opinion6 on the Law on mortgage holidays and in 

December 2023 it adopted an opinion7 on two draft laws amending the Law on mortgage holidays. 

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6  
7  

Ustawa z dnia 26 października 1995 r. o społecznych formach rozwoju mieszkalnictwa (consolidated text: Dziennik 
Ustaw of 2023, item 790). 
See Opinion CON/2023/8. All ECB opinions are published on EUR-Lex. 

See Opinion CON/2023/46.  

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3. 

Borrower Support Fund 

3.1  The ECB previously encouraged the Polish authorities to carry out a thorough analysis to consider 

the  active  use  of  the  Borrower  Support  Fund  before  introducing  solutions  relating  to  mortgage 

holidays 8. 

3.2 

In that respect the ECB welcomes the draft law’s objective of enabling the wider use of the Borrower 

Support Fund. However, the ECB cautions against an extensive widening of the eligibility criteria for 

access  to  the  Borrower  Support  Fund.  In  particular,  the  scale  of  the  proposed  relaxation  in  the 

eligibility criteria would lead to a situation in which new loans granted in accordance with prudential 

recommendations on creditworthiness assessment 9 would immediately qualify for support from the 

Borrower Support Fund. This might in turn discourage banks from granting such loans, leading to 

limited access to credit for borrowers with a lower income. With that in mind, the ECB encourages 

the Polish authorities to reassess the effect the proposed eligibility criteria may have on access to 

credit. At the same time, the ECB questions whether further extension of mortgage holidays will, in 

practice, reduce incentives to use the Fund10.  

4. 

Eligibility criteria for mortgage holidays 

4.1  As  mentioned  by  the  ECB  on  a  number  of  occasions,  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 11. 

4.2  The ECB welcomes that the draft law proposes to introduce specific eligibility criteria. At the same 

time, as previously noted  by the ECB, 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 moratorium in the 

public interest12. 

5. 

Impact of the draft law on the banking system and on financial stability 

5.1  Widespread  payment  holidays  give  rise  to  financial  stability  concerns.  On  the  one  hand,  where 

borrowers  face  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. The impact of payment holidays on banks’ 

profitability is further exacerbated by  a scheme under which the repayment period  is extended  in 

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9  

10  

11  
12  

See paragraph 3.6 of Opinion CON/2023/46. 

“Recommendation  S”,  FSC,  published  on  the  website  of  the  Polish  Financial  Supervisory  authority  available  at 
www.knf.gov.pl. 

See  also  opinion  of  Narodowy  Bank  Polski  on  an  earlier  version  of  the  draft  law  published  on  the  website  of  the 
governmental legislation office available at https://rcl.gov.pl/. 
See paragraph 3.2 of Opinion CON/2023/8 and paragraph 4.1 of Opinion CON/2023/46. 

See paragraph 4.3 of Opinion CON/2023/46. 

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accordance with the number of deferred instalments. Under these circumstances, the value of the 

loan  decreases  due  to  the  non-payment  of  instalments  on  it  during  the  repayment  suspension 

period13. 

5.2  Reduced bank profitability means in turn that banks have reduced capacity to retain earnings and 

thus to increase the 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 14, particularly if the loan portfolio subject to payment holidays constitutes a large proportion 

of their assets or if their profitability is already low15.   

5.3 

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

potentially  decrease  their  franchise  value.  Consequently,  credit  institutions  may  face  increased 

difficulty in attracting investors in respect of the potential raising of equity or issuance of bonds 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 last resort, not lending at all. This means that the 

draft  law  not  only  allows  mortgage  borrowers  a  payment  holiday,  but  that  borrowers  may  in  fact 

receive a financial transfer from their lenders 16. 

5.4  Additionally, the ECB has pointed out in several opinions that the ability of financial institutions to 

effectively  manage  credit  risk  depends  on  a  reliable,  predictable  and  stable  legal  framework  that 

adequately balances the interests of both the creditor and the debtor 17.  

5.5  Considering that the payment holidays, albeit in a different form, are being applied for the third year 

in a row, the ECB highlights that continuous and widespread payment holidays, especially but not 

limited to those that disregard the actual financial position of the relevant debtors, may contribute to 

increasing moral hazard among debtors, who may assume that such holidays will be extended and 

adjust their behaviour accordingly 18.  

5.6  As indicated above, the ECB suggests that, before introducing new solutions, it may be advisable to 

first make use of the instruments that are already available, such as the Borrowers Support Fund 19. 

13  
14  
15  
16  
17  

18  
19  

See paragraph 5.1 of Opinion CON/2023/46. 
See paragraph 3.3 of Opinion CON/2023/8. 

See paragraph 5.2 of Opinion CON/2023/46. 
See paragraph 3.3 of Opinion CON/2023/8 and paragraph 5.3 of Opinion CON/2023/46. 

See paragraph 2.4 of Opinion CON/2010/8, paragraph 2.4 of Opinion CON/2012/40, paragraphs 2.1.1 and 2.2.3 of 
Opinion CON/2018/13, and paragraphs 2.3 and 3.1.4 of Opinion CON/2019/9. 
See paragraph 5.4 of Opinion CON/2023/46. 

See paragraph 5.5 of Opinion CON/2023/46. 

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

Therefore,  extended  mortgage  holidays  as  provided  for  in  the  draft  law  may  have  negative 

consequences for financial stability in the euro area, as well as in Poland 20.   

ECB-PUBLIC 

This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 8 April 2024. 

[signed] 

The President of the ECB 

Christine LAGARDE 

20  

See paragraph 3.12 of Opinion CON/2023/8 and paragraph 5.6 of Opinion CON/2023/46. 

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