Loan installment by PLN 700? All eyes for a key indicator

The WIBOR indicator determines the interest rate on loans between commercial banks on the Polish market. It affects the interest rate on loans, especially mortgage with a variable interest rate, and thus the amount of installments.

The vast majority of loans granted in Poland are those with a variable interest rate. In such a situation, the installment is usually a 3M (three -month) or 6m (six -month) WIBOR derivative and a bank margin. WIBOR is published daily and can change, and the amount of loan installments is updated every three or every six months.

WIBOR – what is it and why it affects the amount of the loan installment >>>

Currently, both WIBOR 3M and 6M rates are falling. All through pigeons voices flowing from the Monetary Policy Council and the Central Bank.

Return prospects inflation They draw to the target more optimistic than before, and it can be assessed, therefore, that in the near future there will be a space to reduce interest rates – according to the words of the President of the NBP Adam Glapiński, posted on the pages of the NBP financial observer.

A member of the Republic of Poland Ludwik Kotecki said in an interview with TVN24 BiS that to interest rate reduction It can happen in May.

“I think in May.” Borrowers are waiting for a key decision >>>

As reported in Rankomat.pl analysis, the first reduction in loan installments will appear in May.

“WIBOR 6M was still 5.75 percent at the beginning of April, and now only 5.17 percent in the case of a loan for PLN 500,000 per 30 years, with a variable interest rate based on the 2.15 % margin and WIBOR 6M, The installment will drop by PLN 234 “ – calculate analysts, emphasizing that the decrease will only take place after the bank's interest rate update.

The creators of the analysis pointed out that “financial institutions are increasingly lowering the forecast interest rates”. “In 9 months, WIBOR 3M is to be only 3.64 percent for a reminder, at the beginning of April it was 5.85 percent, and currently dropped to 5.48 percent. So it looks like a decrease in foot by over 2 pp” – predict the authors of the report.

“If such a forecast worked, the loan installment with a variable interest rate – at PLN 500,000 for 30 years – would drop from PLN 3,669 to PLN 2,931, i.e. by PLN 738” – added.

The authors pointed out that in the case of borrowers with a fixed interest rate, the situation may be a bit more complicated. However, they can use two solutions that will save them.

“They can wait until the period of fixed rate is over and then switch to the variable interest rates or a new, lower fixed rate. However, this will often require several years of waiting – the fixed interest rate usually lasts 5 years. If someone took a loan last year, the interest rate and installment will fall only in 2029” – emphasized.

The second solution that will help reduce the installment is to refinancing the loan, i.e. making a new commitment with a lower interest rate to repay the previous one.

“As a result, the interest rate may fall, e.g. from 7.87 percent (average fixed interest rate in July 2024) to about 6.36 percent. If the loan amount is PLN 500,000, and the repayment period is 30 years, the installment will drop from PLN 3,624 to PLN 3,114. If the refinancing was carried out later – at an even lower interest rate – the inheritance would be even greater. 5.86 percent would be PLN 2,953, and at 5.36 percent

“Assuming that the loan was taken out in July 2024, without refinancing the installment of PLN 3,624 would be paid for over 4 years (51 months). In total, refinancing at this moment would reduce the cost of the loan during this period by PLN 25,967. In the following months, the refinancing rates will probably even fall, and potential savings will increase with them.”

The analysis emphasized that “KNF regulations do not allow refinnovation to change the fixed interest rate to variables.” This means that in the case of subsequent rate discounts and the desire to obtain another installment reduction, you will need to refinance again. “Meanwhile, such a procedure is quite troublesome and time -consuming” – he pointed out.

“Another potential disadvantage is the fact that banks are starting to enter higher margins in new loan agreements. Over time, we can conclude that we do not want to refinance the loan again, but go to the variable interest rate. Then the amount of the margin entered in the contract will start to realistically affect the amount of installments” – explained analysts.