Poland to ease mortgage bond rules - Finance Ministry
January 21, 2014
The Polish government will rejig its mortgage bond rules to increase long-term financing with an eye to refinancing as much as 20% of new housing loans via such instruments within five years, a Finance Ministry document shows.
"It is expected that within five years since regulation's implementation, the share of refinancing new housing credits with mortgage bonds will reach the level of 20% and for the entire housing loan portfolio . . . this share is estimated at 7%," the ministry wrote in an outline to pending legislation.
In the pending bill, the government will lift withholding tax for foreign investors on mortgage-backed covered bonds, a key barrier that has limited the market to date. As of today, 0.7% of Poland's mortgage market is financed through such mortgage backed covered bonds, Finance Ministry said.
The government will further tweak collateral rules for the instruments, including a 10% minimum for excess collateral, to increase security and please rating agencies. "It should translate into the perception of the Polish financial market by foreign investors," the Ministry wrote in its document.