Poland’s Bank Millennium issues statement on quarterly mortgage target

Currently, the Polish borrowers who had chosen mortgages denominated in foreign currencies, primarily Swiss francs, attracted by the promise of lower interest rates, face a financial predicament. The subsequent appreciation of the Swiss franc against the Polish zloty, coupled with interest rate hikes in Switzerland, has placed borrowers in the damaging position of managing larger-than-expected repayments.

Fernando Bicho, Chief Financial Officer at Millennium Bank, addressed the press regarding the absence of clearly defined eligibility criteria for this scheme.

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The credit vacation initiative, introduced by the Polish government last year, allowed mortgage holders to defer up to eight loan payments in both 2022 and 2023, with plans underway to extend it into the upcoming year. Bicho emphasized that the financial impact of this extension hinges on the prevailing interest rates during its implementation, adding an element of uncertainty.

He stated:

The impact depends on the level of interest rates that will be applied during the implementation of this law. We are not giving any estimates because there are still elements that are unclear from our point of view regarding the criteria for qualifying for these credit vacations.

Bicho’s statement also anticipated an uptick in the bank’s cost of risk. He clarified that this transition would not be immediate, projecting its realization in the following year.