Interest rates will remain unchanged until the end of 2022. “Unfortunately, the installments of some mortgage loans will increase anyway” – pointed out Jarosław Sadowski, chief analyst at Expander Advisors. The reason is the high levels of WIBOR indices, which determine the interest rate on the loan. Sadowski also pointed out that in the coming months “a small group of borrowers will most likely have an installment reduction”. The analyst prepared calculations of loan installments after Wednesday’s decision of the Monetary Policy Council.
The Monetary Policy Council on Wednesday, during the third decision-making meeting in a row, kept the NBP interest rates unchanged. The main, reference interest rate is 6.75 percent.
“Unfortunately, the installments of some mortgage loans will increase anyway. However, we also have good news. A small group of borrowers will most likely have their installments reduced,” commented Jarosław Sadowski, chief analyst at Expander Advisors.
As a rule, decisions of the Monetary Policy Council affect the level of WIBOR ratios, which at the same time translates into the amount of loan installments. WIBOR ratios together with the bank’s margin are components of the loan interest rate. WIBOR 3M and 6M rates include probable increases or interest rate cutsthat may emerge in the next three or six months.
Some banks use the WIBOR 3M rate, which means that the interest rate on the mortgage loan is updated every three months from the moment the loan is launched. In the case of WIBOR 6M, the interest rate is updated every six months.
Interest rates and loan installments
Sadowski pointed out that the installments of these loans, which will have an interest rate update in the near future, will increase. “Smaller growth will affect loans with an interest rate based on WIBOR 3M, where the update takes place every 3 months” – he noted.
Three months ago, WIBOR 3M was 7.16 percent, and at the beginning of this week it was 7.22 percent. The calculations prepared by Sadowski show that as a result, the installment of the loan for PLN 300,000 for 25 years, granted in June 2021, will increase from PLN 2,556 to PLN 2,567. “After the increase, the installment will be as much as PLN 1,233 higher than in the initial repayment period” – he noted.
The analyst pointed out that a greater increase in installments will appear in the case of loans with an interest rate based on WIBOR 6M, because in their case the update takes place once every 6 months. “Six months ago, WIBOR 6M was 6.7 percent, and now it is 7.4 percent. As a result, the installment of our sample loan will increase from PLN 2,463 to PLN 2,601. This means an increase of as much as PLN 1,261 compared to the installment paid immediately after obtaining this loan – he pointed out.
The installments of some loans may fall
Jarosław Sadowski pointed out that borrowers who had the last update of the interest rate at the beginning of November can count on a decrease in the installment amount. “Back then, WIBOR rates were very high because financial institutions expected further increases in interest rates. Currently, these rates are lower and if they remain at this level or continue to fall, the installments of some loans will also fall,” the analyst explained.
Sadowski pointed out that, for example, on November 7, WIBOR 3M was as much as 7.61 percent. “If someone was unlucky enough to update the loan interest rate on that day, then in December, January and February its installment will be PLN 2,650. Later it may fall to PLN 2,572, if WIBOR 3M will then be the same as now, i.e. 7.22 percent” – he pointed out.
As he noted, “it will be similar in the case of a loan based on WIBOR 6M”. “If the interest rate update took place at the beginning of November, the installment may be lowered after 6 months, unless WIBOR 6M returns to its previous level” – added the main analyst of Expander Advisors.
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