Mortgage holidays and the stability of the financial situation of mortgage banks in Poland

Abstract

The rise in inflation and interest rates in 2021–2022 contributed to an increase in mortgage servicing costs for households in Poland. In response, the credit moratorium (so-called mortgage holidays) was introduced in 2022 under the Act on Crowdfunding for Business Ventures and Assistance to Borrowers, allowing borrowers to suspend the repayment of up to eight mortgage instalments. The aim of this measure was to improve households’ financial situation; however, its impact on the banking sector, particularly mortgage banks, requires detailed analysis. This article aims to assess the consequences of this form of debt relief on the profitability of mortgage banks in Poland. In addition, attention was given to these entities’ liquidity and solvency development. The study used financial data from five mortgage banks, derived from their financial statements for the years 2021–2023. The results indicated a significant negative impact of the mortgage holidays on the financial performance of banks, particularly on interest income, interest margin, and net financial results. Despite maintaining liquidity and solvency above regulatory requirements, the banks’ profitability deteriorated significantly during the examined period. The research findings made it possible to verify the effects of mortgage holidays on specific areas of the financial situation of mortgage banks, as well as to formulate recommendations regarding their exposure to legal and regulatory risks, which are crucial for maintaining the stability of the financial system in Poland.