The first reduction in interest rates since June 2009

At its November meeting, the Monetary Policy Council decided on lowering the level of interest rates in Poland by 25 basis points, widely expected by analysts and economists and 100% market priced. Thus, the main NBP ratereference – from November 8 it will not be 4.75%, but 4.50%.

This is good news for all those who are in debt in the Polish currency, especially since the first reduction in the cost of money in Poland since June 2009 will not be the last, but the initial one in the whole series.

The next one with quite high probability may occur as early as December, which was emphasized during the conference after the MPC meeting by the head of this body and the president of the NBP Marek Belka.

Expectations for lowering interest rates

By the MPC have for a long time had a positive impact on the moods of all Poles who are in debt in zlotys and have also improved the mood of those who are intending to contract this type of commitment. Due to the scale, it is primarily about current and future housing loan holders.

The money market rate, which is key to interest on their obligations, which is 3-month Wibor, has been falling since the summer holidays. July 11 this year amounted to 5.14% and was the highest since January 2009. Since then, however, it has already decreased by 0.44 percentage points. and on November 7, before the MPC decision, it was 4.70%, being the lowest since July 28 last year.

Though not automatically, because banks

Introduce changes not on a daily basis, but over longer periods of time – the amount of installments that they have to pay back on a monthly basis. For an example housing loan in the amount of 190 thousand. USD, incurred for 30 years in Polish zlotys, with a 10% own contribution, in equal installments and 1.5% of the bank’s margin, the above-mentioned decrease in the 3-month Wibor rate from 5.14% to 4.70% translates into a decrease in the monthly installments by almost USD 55 from USD 1218.48 to USD 1,163.69.

The November interest rate reduction will lead to a further decline in 3-month Wibór, and if as a result of subsequent MPC actions this rate went down to e.g. 4.00%, the person paying this type of liability will save another nearly USD 85 (installment USD 1078.80), in total, it will save around USD 140 a month.