November 28, 2022

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WIBOR is the highest in 20 years.  What about loan installments?  Latest accounts

WIBOR is the highest in 20 years. What about loan installments? Latest accounts

The WIBOR 3M rate rose to 7.34%, the highest level in nearly 20 years (since October 23, 2002). People for whom the mortgage rate will be updated in the near future should prepare for a significant increase in the premium – warns Jaroslav Sadovsky, senior analyst at Expander. This update is usually done quarterly for WIBOR 3M based interest rate loans or every six months for WIBOR 6M.

As calculated by the analyst, in the previous update, WIBOR 3M was 7 percent. As a result, the loan was paid in installments in the amount of 300 thousand. The 25-year PLN, granted in July 2021, will increase from PLN 2,530 (in the last three months) to PLN 2,598. For comparison, in the initial repayment period, that is, before the interest rate increase, the premium was only PLN 1,334. Unfortunately, this may not be the end of the increases. Interest rate futures quotes show 3M WIBOR could reach 8.13 percent in 6 months. Then the premium will rise to 2,757 PLN, says Jaroslav Sadovsky. This is the calculation of the change in installments of the 25-year loan granted in July 2021 with a margin of 2.21 percent. Higher amounts and monthly installments play a role with loans taken for apartments purchased in large cities. For example, for a loan of 700,000 PLN, the initial installment was about 3.1 thousand. zloty. With the current WIBOR, it will rise to 6000. PLN, and if WIBOR increases as indicated in the futures contract, it will be 6.4 thousand. zloty.

It is the WIBOR rate (3 or 6 months) on which the interest on most mortgage loans depends, because there are not many of those with a temporarily fixed rate in the entire portfolio. WIBOR 6M is also growing and reaching 7.49 percent. The market rate at which the loans are based usually precedes the MPC’s decision, which sets NBP rates and reacts to new inflation data. At the last meeting in October, the Monetary Policy Board decided to leave interest rates unchanged and it surprised the market, as few expected such a move. Consumer inflation has already reached 17.2 percent; Core inflation (excluding food and energy prices) also rose to 10.7%. in September.

The jump in loan installments has been largely mitigated by statutory loan holidays, thanks to which borrowers may not pay four installments this year and four next year (one in each quarter). In addition, for example, when the premium exceeds half of the family income, you can use another form of assistance, such as the Borrower Support Fund and annuity subsidies (partially refundable). High interest rates are a big problem for people who want to buy an apartment with a loan. For most people, it is currently impossible due to a lack of creditworthiness.

Monica Krzyniak Sajevic

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