Mortgages at a crossroads. The heads of PKO BP, Pekao and Santander about the “serious disease” of the system
Mortgage loans involve high risks for the institutions granting them, say the presidents of, among others, Bank Pekao, PKO Bank Polski, BNP Paribas and Santander Bank Polska. At the same time, they generally agree that a uniform template for a mortgage loan agreement could help in this situation.
During the Banking Forum held in Warsaw, a “presidents' debate” took place. The heads of leading commercial banks in the country discussed, among others: about the risks associated with mortgage loans.
The first loan for young people only at a fixed rate
The head of PKO Bank Polski, Szymon Midera, emphasized that customers deciding to take out a mortgage loan are guided only by the monthly cost of its servicing.
We should do much more than now to promote a fixed rate, says President Midera. In his opinion, this would be a safer and more predictable solution for the client.
He also noted that due to the fact that banks compete with each other, it would be difficult to establish this Secondly, he should propose a solution that the first loan for young people must be at a fixed rate consensus on the matter without the help of the regulator. – I have a heartfelt request, an appeal to our regulator to help us. First, extend this 5-year fixed rate for at least 8-10 years. This will allow us to stabilize this legal relationship with our clients. Secondly, he should propose a solution that the first loan for young people must be at a fixed rate – said Midera.
This would – in his opinion – eliminate the risk of lack of education and awareness of these people that the risk of variable interest rates is “built into” a mortgage loan.
As the third element, he indicated regulations that would easily raise awareness and educate customers about these products. The president of PKO BP explained that the idea was for them to be aware of the changes and risk of variable interest rates.
A single credit agreement as a “cure” for risk?
In the context of the proposal to introduce a model mortgage loan agreement, Midera said that it was not a perfect tool, but “there is nothing better”. – There is a good chance that the implementation of (…) the model contract (…) will amortize and minimize regulatory and legal risks and stabilize the legal relationship with the client – he said.
He declared that PKO BP is determined to implement a uniform contract template. – This is an agreement that was created not in the banking sector, but with the very strong participation of the financial ombudsman and the consumer community. This is a contract written in simple and transparent language. It is understandable to customers, Midera assured.
There are currently no conditions for granting mortgage loans in Poland
The president of Bank Pekao, Cezary Stypułkowski, put forward the thesis that “there are currently no conditions for granting mortgage loans in Poland.” – Because there has to be legal infrastructure and we don't have it. We have a weakness in mortgage bonds, no one promotes it, we sometimes have a variable loan rate and sometimes a fixed one – he said.
He concluded that the poor infrastructure of the state and the lack of stability mean that “no good music will be created in such an ensemble.”
Referring to the issue of informing consumers, he recalled that in 2006-2007 there was a foundation established, among others, by the Ministry of Finance, the National Bank of Poland and the Polish Bank Association, which created guides for mortgage borrowers, informing, among others, about the risks associated with this financial product. – Who reads this? Readership in Poland, especially of informants, is limited – argued Stypułkowski.
Model contract template – simple language instead of legal jargon
In the opinion of the president of Alior Bank, Piotr Żabski, a uniform agreement could be “a great cure for the situation we have today”, but – as he emphasized – it is a tablet treatment for a serious disease. – Where did all the discussion about this come from? Because there is permission to question a legal agreement concluded retrospectively and settle it retrospectively – said Żabski. He added that the banks' legal departments, when creating new provisions, believe that they are good “until someone questions them again and settles them (…) retroactively“.
The head of BNP Paribas, Przemysław Gdański, emphasized that he was “all in favor” of the issue of a standard mortgage loan agreement. – It seems to me that it is worth sitting around the table as leading banks and simply saying to ourselves: “okay, we will promote it as a standard to minimize legal risks (…) as much as possible in the case of the longest liabilities on the Polish market.”
Referring to variable or fixed interest rates on these loans, Gdański pointed out that there are also differences in Europe. – Southern European countries, such as Spain and Portugal, operate very strongly on variable interest rates in the case of mortgage loans, so there is no absolute truth here – he said.
Regulatory risk more dangerous than cyberattacks?
The president of Santander Bank Polska, Joao Bras Jorge, emphasized that the greatest risks for banks in Poland are related to the regulatory environment. – We will handle the costs of adjustments or additional services. What we have a problem with are unforeseen risks (…) Regulatory risks (…) are much higher than market, credit, cybersecurity and geopolitical risks – he said. He added that the regulator and the government should work together to reduce regulatory risks. (PAP)
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