The Polish banking sector is well capitalised and its fundamentals are solid, Prime Minister Mateusz Morawiecki said on Tuesday after announcing 500,000 mortgage holders have already applied for mortgage holidays.

"The cost (of mortgage holidays) for the banking sector ... will be up to 20 billion zlotys ($4.35 billion) over two years," he added during a press conference.

The payment holiday scheme, effective from last Friday, is intended to help mortgage owners whose monthly instalments have surged due to rising interest rates by allowing them to skip a maximum of eight payments in 2022 and 2023.

($1 = 4.5975 zlotys) (Reporting by Anna Wlodarczak-Semczuk and Pawel Florkiewicz; Editing by Andrew Cawthorne)