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Monday, December 4, 2023

Loan installments. Interest rates and WIBOR. Indicators already below the main NBP rate

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WIBOR indicators have been falling for several days. As economist Rafał Mundry pointed out in social media, some are already below the main reference rate of the National Bank of Poland. This is important information for borrowers, because it is WIBOR that determines the amount of their installments.

WIBOR 1Y (annual), WIBOR 6M (six months) and WIBOR 3M (three months) continued to fall on Thursday, July 20, and amounted to 6.65% and 6.65%, respectively. (6.66 percent the day before), 6.69 percent. (6.70) and 6.78 percent. (6.79%). This is important and good information for borrowers. WIBOR together with the bank’s margin are components of the loan interest rate. At the same time, WIBOR 1Y 3M and 6M rates include probable increases or interest rate cutsthat may appear in the next year or three or six months.

“We are starting the descent from the top” – economist Rafał Mundry pointed out in social media. In the next entry, he pointed out that “both 1Y and 6M are already below the NBP rate”.

“3M is chasing and there are high chances that next week it will also meet the NBP (reference) rate” – he added.

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At the same time, as Mundry wrote, “WIRON still up”. Meanwhile, “banks are starting to offer loans for WIRON instead of WIBOR”.

Important information for borrowers

At the last July meeting, the MPC decided to keep the NBP interest rates unchanged. The reference rate currently remains at 6.75 percent.

At the same time, the President of the National Bank of Poland, Adam Glapiński, announced at a later press conference that the Council had formally ended the cycle of interest rate increases, and the next moves, after meeting the conditions, would be to reduce them in 2023, in gradual steps of 25 basis points. He added that under the right circumstances, the rate cut could take place as early as September.

MPC member Gabriela Masłowska told PAP Biznes this week that a 25 bp rate cut would in September or October is theoretically possible and would be understandable if the incoming data indicated it, but decisions in this area will not be hasty. In turn, MPC member Iwona Duda indicated in the BI that if a decline inflation will be permanent at a rapid pace, there will be arguments for a rate cut after the holidays.

– Lowering interest rates at this stage will be a mistake. And I hope it doesn’t happen. Only the first month of core inflation stabilization is behind us. The July inflation report indicates that we are more missing the target than it seemed in March, in the previous report. Estimates of unit labor costs and wages, as well as GDPhave been increased. Where is the room for downgrade here? – said MPC member Ludwik Kotecki in an interview for the Money portal.

NBP reference rate PAP

New indicator

WIBOR used in financial contracts is to be completely replaced by the end of next year by the WIRON index. For this reason, Bank Millennium, ING Bank Śląski and Bank BNP Paribas have decided to suspend offering mortgage loans with a variable interest rate in recent months. Mortgage loans with a periodically fixed interest rate remained in the banks’ offers.

Recently, ING Bank Śląski, as the first bank in Poland, introduced to its offer mortgage loans based on the new reference index WIRON. The loan interest rate will be updated monthly. Work on the implementation of the new mortgage offer is also underway at Bank Pekao, mBank, Bank BNP Paribas and Bank Millennium.

Main photo source: Grand Warsaw/Shutterstock

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