Polish mortgage holidays risk permanent damage for banks

In what was supposed to be a banner year for Poland’s banks, free universal mortgage holidays are set to halve profits in the sector in 2022. Many fear the government will extend the policy as elections approach in 2023. Are Poland’s attacks on mortgage interest margins in the name of fighting Russia-fuelled inflation a sign of things to come elsewhere?

Poland has a war on its doorstep. Missiles have exploded within miles of its border and more than five million Ukrainian refugees have fled through the country. But for Poland’s banks, the main impact so far has not been borrowers being unable to pay their loans but the costs of their government’s financial sector policies.

Since the invasion, Polish prime minister Mateusz Morawiecki has put in place a set of measures that weigh extraordinarily heavily on banks’ profits.

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