A model mortgage loan agreement will reduce the risk of invalidation

The widespread use of a model mortgage loan agreement will reduce the risk of such agreements being invalidated, and the elimination of legal risk will enable access to housing loans for new borrowers, experts associated with the European Financial Congress (EKF) said, presenting a draft of such a model mortgage loan agreement on Thursday.

The draft of the model mortgage loan agreement presented on Thursday was initiated by the Responsible Finance Club, operating at the European Financial Congress. Legal experts, including academics and practitioners in civil law, particularly in the consumer financial market, participated in its preparation.

The agreement was presented on Thursday by Professor Michał Romanowski, who led the committee preparing the model agreement. He stated that consultations on the draft agreement will last until August 20th, and the final version of the agreement is expected to be ready by September 30th.

According to the draft, a mortgage loan may bear interest at a variable interest rate or at a periodically fixed interest rate. In the agreement, the parties are to agree on the duration of the fixed interest rate. Before the end of the fixed interest rate period, the bank is to present an offer for the next fixed interest rate. If the client does not accept this offer, the loan will bear interest at a variable interest rate calculated as the sum of the reference index and the margin. The agreement will not provide for a so-called transfer period, a mechanism that allows for a change of lender if the client does not accept the new fixed interest rate.

The proposal includes a compensation mechanism for early partial or full repayment of a loan with a periodically fixed interest rate. The bank will only collect compensation if the National Bank of Poland (NBP) reference rate on the early repayment date is lower than on the date the fixed interest rate applicable for the given period is set. The compensation cannot exceed 1.5% of the early repayment amount for each year remaining in the given fixed interest rate period.

The draft agreement assumes that fees and commissions may increase or decrease over the loan term. Changes in fees and commissions will be based solely on changes in the inflation rate.

The method of implementing the model contract was defined as a legislative initiative (as an annex to an act or a regulation) or as good practices supported by, for example, the KSF.

"We support the initiative of model contract templates, assuming that they are not imposed by law, but are something pre-authorized by the state, an option to be used," said Jacek Jastrzębski, chairman of the Polish Financial Supervision Authority.

He noted that it's worth considering combining all the work currently underway on these types of agreements. The Office of Competition and Consumer Protection (UOKiK) has also prepared a draft of a uniform template for a mortgage loan agreement with a fixed interest rate for at least five years. He also believes it's worthwhile to offer customers a loan with a fixed interest rate first.

PKO BP CEO Szymon Midera announced that introducing this solution would lower the cost of new loans. He announced that the bank would be willing to implement such solutions. (PAP Biznes)

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