Fixed interest rates on mortgage loans are an interesting stabilizing mechanism, and at the same time securing the Customer proposed by the President of UOKiK. The President of UOKiK, Martin Nichawe, appealed to banks to introduce mortgage loans with fixed interest to their offer. The proposal of Mr. Martin Nichawe is supposed to bring two positive effects. One is to increase the stability of the financial sector in Poland and better protection of the borrower during the long-term repayment of the liability.
In my opinion, this position is the repercussion of events related to housing loans granted in Swiss francs. One of the tasks of the Office of Competition and Consumer Protection is the analysis of banks’ activities in granting mortgage loans. The aftermath of the situation with Frankowicz is a particular emphasis on verifying the quality of consumer service in the process of offering PLN mortgage loans and assessment of banks’ information policy. This is quite clearly visible in the following statement of the President of UOKIK.
Two things disturb us. First of all, the method of informing clients about the risk related to taking PLN loans with a variable interest rate. At the moment, customers are not always aware of the risks associated with this product. Moreover, an unfavorable phenomenon is the practical lack of mortgage loans with fixed interest in the offer of banks throughout the entire contract or a significant part of it. They should be a viable alternative to loans with a variable interest rate – explains the president of UOKiK, Martin Nichawe.
UOKIK believes that not only loans granted in currencies carry a threat to the consumer. Therefore, he expects that banks will develop and implement appropriate solutions ensuring comprehensive and comprehensible information about the risk related to the increase of mortgage interest rates. It was rightly noted that the consumer most often does not have and does not have to have legal or economic expertise. Therefore, banks should take into account this fact at every stage of cooperation with the consumer. Take appropriate care of him and provide information from the contracting stage until the end of its execution.
The President of UOKiK proposed that the banks develop a system of early information and warning consumers about the expected adverse changes in interest rate markets. At the client’s request, such an alert would result in the inclusion of a stabilization mechanism prepared by the bank, which would mitigate adverse effects on borrowers.
Not only from the point of view of consumer interests, but also the stability of the financial sector in Poland – it is necessary for banks to introduce mortgage loans with a fixed interest rate to a greater extent. The current low popularity of this product is due to their lower attractiveness compared to loans with variable interest rates. Consumers will be interested in such products, provided that they will be more competitive – emphasizes the president of UOKiK, Martin Nichawe, in a letter addressed to the presidents of banks.
He would add that such information policy should be carried out in a wider scope, which I would consider more as financial education. Until now, banks did not really care about this and consumers were and are treated like milk cows. I have already discussed this topic on the blog and below you will find a link to the article.
Fixed-rate loans generate lower risk not only for the consumer, but also for banks. The reduced risk should be reflected in lower margins, and therefore translate into the cost of mortgage loans. Thanks to this, installments of fixed-rate loans will be competitive in relation to loans with variable interest rates.
In the opinion of the President of UOKiK, banks should not only follow the recommendations of the Polish Financial Supervision Authority in the scope of shaping the PLN loan offer and information activities. Recommendations of the Financial Supervision Authority should not be a barrier for banks in creating and applying higher standards, adapted to the changing market situation. It was emphasized that it should be in the vital interest of the banks themselves, as it would increase their long-term economic security.
Banks are to provide the office with information about implemented or envisaged solutions, which will reduce the risk of loans for consumers. The Office does not rule out further actions that will improve the situation of borrowers.