• Mortgage loans offered only in the currency in which most of the consumer’s income is denominated.
• The bank has 21 days to decide whether the loan will be granted.
• The Act on Mortgage Loans and Supervision Over Mortgage Brokers enters into force tomorrow.

The Act on Mortgage Loans and Supervision Over Mortgage Brokers is set to enter into effect on Saturday, 22 July 2017. It is the first Act to provide, in a comprehensive and detailed manner, for the process of advertising, offering, concluding and executing mortgage loan agreements. It is expected to improve the transparency of the market’s offering and strengthen the position of consumers who are often the weaker part in disputes with the banks.

- Regardless of what they are buying, every consumer should always have access to detailed and reliable information about the advantages and risks involved. Only then can an informed decision regarding the conclusion of the agreement be made. I do hope that thanks to the new, comprehensive Act, loans will be taken and granted in a responsible manner – says Marek Niechciał, President of the Office of Competition and Consumer Protection. – I would like to draw the attention of each future borrower to the macroeconomic indicators involved, as their increase may translate into higher instalments. I am talking about the low interest rates. In 2012, the primary reference rate equalled 4.75%, while currently it amounts to 1.5%. Our analysis shows that the majority of loans involve variable interest rates, which means that the value of instalments due may change over time. Those consumers who are going to draw a loan should precisely calculate whether they prepared well enough for the increase of installments and interest rates. Currently the installment in height of 300.000 PLN taken out for the period of 30 years amounts to 1400 PLN. If the interest rates increase up to the level noted five years ago, the height of the installment will increase to 2000 PLN. Based on the previous experiences it is possible to conclude that within years the level of the installments can considerably cross the present limit, so the interest rates are likely to increase and constitute a serious burden for the credit recipient’s household budget – adds the President of UOKiK.

- Thus I recommend that banks as the institutions of public trust, having the greatest risk awareness and management tools to administer it, introduce to their offer long term, based on the stable interest rates mortgage loans, as most of the developed countries (if possible through the whole loan term). It may guarantee consumers essential choice and curb, as noticed by UOKiK, the system risk related to the credits with variable interest rates – adds the President of UOKiK.

It is worth to remark that some contracts can assume fixed interest rates related not to the whole loan period but only to its part. In this case the consumer still takes the risk of potential increase in interest rates, since after the expiration of its validity  its height can increase. Only credits with a stable interest rate throughout the whole loan period can fully protect from the risk of the change in interest rates.

The provisions of the Act on Mortgage Loans and Supervision Over Mortgage Brokers apply to all agreements concluded from 22 July 2017 onwards. They are binding upon banks, brokers and agents. The regulations impose specific solutions regarding advertising mortgage loans, as well as state what information needs to be provided prior to the provision of the loan and in the loan agreement itself.

Key changes:

• The mortgage loan can only be granted by a bank or the Savings Credit Union (SKOK).
• Loans may be taken out only in the currency in which you are earning, or in which the majority of your funds is denominated.
• Information form – you will receive one, prior to the conclusion of an agreement, from each lender or broker. This will allow you to conduct a more in-depth comparison of the offers made, as the form will contain, inter alia, information about the total loan amount, repayment principles, the interest rate and its modification principles. The terms and conditions specified in the form shall remain valid over the period of 14 days.
• Lenders and brokers who offer their advice to consumers are required to offer at least 3 mortgage loan agreements.
• 21 days – the period of time, commencing on the application submission date, within which the bank is required to make the final credit decision (you may also consent to an early submission of such a decision). The credit decision shall be deemed to constitute a binding offer.
• The requirement to assess creditworthiness based on information provided by the consumer, as well as collected from various databases and the lender’s database. The agreement will be concluded only if the result of such an assessment is positive.
• The mortgage loan agreement may be withdrawn from within 14 days from its conclusion. All you have to do is sent a termination notice, by registered mail, prior to the expiry of that deadline. The only cost you bear is interest for the period between the date the loan has been paid out by and returned to the bank. While concluding the agreement, the lender or broker has to provide you with a hard copy of an agreement termination template.
• Premature repayment of the loan, in part or in whole, will be possible at any time. However, the agreement may provide for compensation if loans relying on a fixed interest rate are repaid prematurely – during the period of time in which the permanent rate remains in effect, or if you repay a variable interest loan prior to the expiry of a 36-month period.
• The maximum compensation must not be higher, in the case of a fixed rate loan, than interest that would be due, on the amount repaid, over the period of one year following the actual repayment (or over a shorter period of time if the remaining loan period is shorter than one year). It must not exceed 3% of the amount repaid either. The compensation must not be higher, both in the case of fixed and variable rate loans, than the lender’s costs directly related to the early repayment.
• Overdue payments. If you fail to repay an instalment in due time, the bank will set an additional deadline - not shorter than 14 business days. It will also inform you about the possibility of restructuring the debt.
• Debt restructuring – if you are not capable of repaying your loan, the bank will be able to: temporarily suspend the repayment, reduce the amount of instalments, extend the loan period or propose a different solution. If the bank rejects the debt restructuring application, or if the restructuring scheme fails, the bank will enable you to sell the property within a period of not less than 6 months.
• Transparent advertising. The information provided must be unambiguous, legible, understandable and visible. Whenever an advertisement presents information about any loan-related cost, including the interest rate, more specific data will be required about: whether the interest rate is of the fixed or variable variety, what the overall loan amount is, APRC, term of agreement, total amount due, value of instalments. Such information will be related to a representative example, and will be presented in an equally visible, legible and audible manner as the remaining information concerned with the cost of the loan. In the case of variable interest rate loans - information about rate change risk must be included. If a specific advertisement does not contain any information about the cost of the loan, information about APRC will have to be presented on a mandatory basis.
• Bundling, i.e. conditioning the conclusion of the agreement on purchasing specific products, will be banned unless it involves a free bank account in which funds used to repay the loan are deposited. Products may be sold jointly (i.e. loan agreement with another product), but the customer may conclude the agreement without consenting to purchase other products.

The Act on Mortgage Loans and Supervision Over Mortgage Brokers has been drawn up by the Ministry of Development and Finance. It implements the directive of the European Parliament and of the Council on credit agreements for consumers relating to residential immovable property.

Furthermore, the Act on Mortgage Loans and Supervision Over Mortgage Brokers has introduced, to the Act on Consumer Credit, considerable amendments concerning the process of advertising consumer loans.

In the case of advertisements containing data related to the cost of the loan, the set of compulsory information will have to be presented equally visibly, legibly and audibly as other information pertaining to the cost of credit. Other advertisements concerned with consumer credit will be required to contain information pertaining to APRC, presented in the manner referred to above. This regulation is aimed to encourage the lenders to create ads that contain APRC information only, as this is the piece of credit cost information that is of the greatest significance for consumers. Such a solution may encourage competition based on the attractiveness of APRC, and not only on selected credit costs (e.g. low commission).

Additional information for the media:

UOKiK Press Office
pl. Powstańców Warszawy 1, 00-950 Warszawa

Phone: 695 902 088
Email: biuroprasowe@uokik.gov.pl

Twitter: @UOKiKgovPL