Until now, domestic law did not regulate mortgage loans very precisely. Although the ‘mortgages’ were listed in the Consumer Credit Act, they are only affected by a few regulations from the legal act (e.g. related to mandatory elements of the contract). Since 2007, the Good Finance Association has been primarily involved in the regulation of the mortgage market.
However, it should be remembered that the subsequent “Good Finance” issued by the GFIC did not have the status of an act or other legal act. Banks complied with these recommendations only because of possible sanctions for financial supervision.
The legal status of mortgage loans will soon change as the government is preparing a special law. This legal act confirms the principles previously set by the GFIC and also introduces several new solutions that will be of particular interest to consumers.
Only new borrowers will benefit from the proposed regulations …
As a preliminary remark, it is worth mentioning that the introduction of the law relating only to mortgage loans was enforced by EU legislation. Poland as an EU member state must implement to its right the solutions provided for in Directive 2014/17 / EU of February 4, 2014, on consumer credit agreement related to residential real estate.
The introduction of the mortgage law is also associated with the fact that important rules regarding “mortgages” are currently dispersed in several different legal acts.
The bill being prepared aims, among others, at improving the position of a consumer taking out a mortgage. It is worth noting that all new regulations will apply only to consumers, i.e. people who take out a mortgage for purposes directly unrelated to business or professional activity.
The Mortgage Act will not cover, for example, entrepreneurs lending funds needed to buy business premises. The benefits of the new regulations will not be able to count the number of people who are consumers but have entered into a loan agreement before entering
The new act will limit, among others charging a commission for early repayment
The act prepared by the government provides for many detailed changes which concern not only the principles of offering and granting mortgage loans but also financial intermediation.
Several aspects can be identified, particularly of interest to future borrowers. The proposed regulations provide for the following solutions:
- No commission for early repayment of a loan with a variable interest rate after 36 months from the conclusion of the contract.
- Limitation of the commission for earlier repayment to the number of costs incurred by the bank in connection with the earlier repayment (the limitation shall apply irrespective of the type of rate loan interest rate).
- Introduction of a special mathematical formula according to which the maximum amount of commission for early repayment is to be calculated (both loans with variable and fixed loans will be used) interest rate).
- Confirmation of the principle according to which a loan in a foreign currency can be taken only by a Pole who does not bear exchange rate risk (income currency = liability currency).
- Introduction of the possibility of withdrawing from the mortgage contract (without giving reasons) during the first 14 days of its conclusion. The only cost associated with the withdrawal will be interesting for the period of the contract. The borrower has to submit a declaration of withdrawal on the form provided to him after the conclusion of the contract.
- Introduction of the obligation to obtain the GFI permit for persons dealing in mortgage brokerage. This requirement is expected to increase the quality of services provided to consumers. The draft law on mortgage loans also provides for detailed requirements for intermediaries (e.g. regarding criminal record and education).
- Launch of the register of credit intermediaries, which will be publicly available and kept by the Good Finance Investment Corporation.
- Exclusion of the possibility of selling other banking products together with a mortgage (the exception applies to the free account for servicing the loan).
The ban on tying (cross-selling) of other financial products together with mortgage loans, mentioned in the last point, can certainly be worrying for banks. It’s no secret that ‘mortgages’ bring banks relatively low interest, fees, and commissions, and the profitability of granting them depends to a large extent on the attached policies.
Thus, the introduction of a ban on cross-selling may result in limiting the availability of mortgage loans (especially for the least affluent consumers).
After the changes, the borrower will still be liable with all his assets
Contrary to the hopes of many people, the Mortgage Act does not introduce radical changes in the method of financing real estate. In the context of “mortgages”, it is often proposed to limit enforcement to only the loaned property.
Such an American model is beneficial for debtors who do not have to be afraid that the bailiff, apart from the house or flat, will also take up other assets and property. regularly withdraws part of his salary.
Burn loan installments by up to 30%.
It is worth realizing that the prospect of limiting the scope of enforcement of mortgages, apart from the advantages, would also have serious disadvantages.
Due to the financial stability of banks, such a change could only be applied to new contracts. After a possible limitation of enforcement to the borrower’s apartment or house, banks would reduce the limits on financing real estate (e.g. up to 60% of the purchase price).
Such a change would result in an increase in the required contribution and a decrease in the availability of new loans.