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Interest rates in Poland. WIBOR 3M, WIBOR 6M down, installments of some loans will fall – Bartosz Turek comments

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NBP interest rates remain unchanged. However, borrowers can count on a decrease in installments. This applies to PLN mortgage loans with interest rates based on WIBOR 3M or WIBOR 6M. The reason is the interest rate cut expected by the market, which may take place for the first time as early as next month. – In my opinion, by the end of the year cuts of at least 75-100 basis points should be expected – indicated Bartosz Turek, chief analyst at HRE Investment Trust.

WIBOR 6M on Thursday amounted to 6.53 percent. This is the lowest level since May 4, 2022. Greater fluctuations in recent days – both up and down – are observed in the case of the WIBOR 3M index, which, although it increased slightly on Thursday to 6.69 percent, remains at levels not seen since June 2022. WIBOR rates are set every business day, their value will be known on Friday at 23.00.

Bartosz Turek, chief analyst at HRE Investment Trust, emphasized that this is not the end of the declines in the value of WIBOR 3M and WIBOR 6M. The 3M and 6M WIBOR rates include probable increases or interest rate cutswhich may appear in the next three or six months. Economists of the largest banks in Poland agree that The Monetary Policy Council (RPP) will decide to lower interest rates this year.

Mortgage loans – installment reductions

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– If you believe the forecasts, there is a very high probability that WIBOR will go down in the coming months or quarters. Today, December futures price 3M and 6M WIBOR at levels about 1 percentage point lower than today. FRAs value 3M WIBOR for 4 months at 5.7 percent, and 6M WIBOR at 5.6 percent, indicated Bartosz Turek, chief analyst at HRE Investment Trust.

WIBOR 3M in the last three monthsstooq.pl

WIBOR 6M in the last three monthsstooq.pl

Therefore – as he pointed out – all holders of PLN housing loans with variable interest rates should expect a reduction in loan installments. WIBOR together with the bank’s margin are components of the loan interest rate. Therefore, some borrowers whose interest rate will be updated in the near future should see installment reductions.

– Consider the example of someone for whom the bank would update the interest rate on August 24. If we have a loan based on WIBOR 3M, then 3 months earlier this ratio was valued at 6.9 percent, and on August 24, the latest data on WIBOR came from the end of the previous business day (August 23), i.e. at 6.65 percent. In the case of a loan taken out for PLN 300,000 and 25 years with a margin of 2.6 percent, this means an installment lower by about PLN 50, which, with its amount below PLN 2,600 per month, is a relief that can already be noticed – he calculated Bartosz Turk.

The analyst noted that “in the case of loans based on WIBOR 6M, the movement would be greater”. – On August 23, WIBOR 6M was 6.54 percent, and half a year earlier, on February 23, it was 7 percent. In the case of a loan taken out for PLN 300,000 and 25 years, this means an installment lower by about PLN 90-100 – added Turek.

In his opinion, the prospects for the coming months look even better, “if you believe the forecasts, of course.” – If WIBOR actually falls by 1 percentage point by the end of the year, loan installments may fall by as much as about 10 percent. Going further, in the perspective of almost two years (until May 2025), the installments may go down by about 20 percent compared to the current state – provided, of course, that WIBOR 3M actually drops to around 4 percent in mid-2025 – explained Bartosz Turek.

Interest rates in Poland

The next decision-making meeting of the Monetary Policy Council will be held on September 12-13. Some economists expect the first interest rate cut next month.

– In my opinion, cuts of at least 75-100 basis points in total should be expected by the end of the year, although Professor GlapiƄski (president of the National Bank of Poland – ed.) very firmly replied at the previous press conference that especially cuts of 100 basis points in total are impossible, the analyst pointed out.

The main reference interest rate has remained at 6.75 percent since September 8, 2022.

PAP

Main photo source: Shutterstock



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