WIBOR gives borrowers breathing space. Installments are going down

The September decision of the Monetary Policy Council to reduce interest rates by 25 basis points means that the NBP reference rate is now 4.75%. This change immediately translated into the behavior of the WIBOR index, which determines the amount of mortgage loan installments. Importantly, WIBOR quotations were clearly below the reference rate, which shows that the market expects further cuts.

WIBOR indices

The current values ​​of the indicators are as follows: WIBOR 3M is 4.72%, WIBOR 6M – 4.58%, and WIBOR 1R – 4.45%. This means that longer term indicators are getting lower, which in practice translates into loan installments. The WIBOR mechanism works anticipatingly – if the market expects reductions, the installments start to decrease even before the official decisions of the Monetary Policy Council. This works to the benefit of borrowers, although in the opposite situation – in the case of increases – WIBOR also reacts earlier, increasing the costs of loans.

The example of a 30-year mortgage loan shows that the differences are significant. With a debt of PLN 300,000 PLN installment is approximately PLN 1,950 for WIBOR 3M, PLN 1,922 for WIBOR 6M and PLN 1,898 for WIBOR 1R. For a loan of PLN 400,000 PLN, these values ​​are PLN 2,600, PLN 2,563 and PLN 2,531, respectively, and at PLN 500 thousand PLN – PLN 3,250, PLN 3,204 and PLN 3,164.

Inflation falls

Experts emphasize that the current declines in inflation are mainly due to external factors that may change. For this reason, some MPC members, including Przemysław Litwiniuk, suggest caution when making further decisions. In his opinion, a better moment for further reductions may be November, when the NBP will present a new inflation projection.

The next meeting of the Monetary Policy Council will be held on October 8. If the market is right and further cuts occur, mortgage rates could fall even further.