The ECB and the MBC decided on interest rates. Good and bad information for borrowers.
September 26, 2019
Although the European Central Bank has not decided today to lower the level of interest rates in Euroland, refinancing is still equal to 1%, all Poles paying installments of housing loans taken in euros, or those who are just intending to take on such a commitment have reasons to your satisfaction. The 3-month Euribor money market rate, which is the key for interest on loans in the single currency, is currently the lowest since April 2010, it is only 0.6630% and is more than 2 times lower than the rate in force at the end of last year (1.3560%).
Lower interest means smaller installments expressed in euro
But also those in zloty, because at the moment, despite the recent strong wave of increases, the EUR / PLN exchange rate is lower by PLN 0.12. from that on December 30 and is 4.3447 against 4.4647. The seemingly worse situation is, however, those Poles who repay housing loans in PLN. The Monetary Policy Council also today decided to leave the cost of money in Poland unchanged, the highest level since December 2008 – reference rate still 4.75% – and over the last two days the 3-month Wibor money market rate was the highest since January 2009 year, at 5.12% compared to 4.99% at the end of last year.
It is worth remembering here, however, that housing loans in PLN, in contrast to those in EUR, or Swiss francs which are almost inaccessible, do not carry exchange rate risk and in exchange for higher interest rates guarantee borrowers something completely immeasurably financially, i.e. a restful sleep.
There was no surprise
Today’s decisions of the MPC and ECB did not surprise. This was expected from the Monetary Policy Council by almost 100% of analysts and economists surveyed by the news agencies, and by 73% from those surveyed by the Bloomberg agency. In the latter case, the remaining prognosis (12 out of 44) expected a reduction in interest rates in Euroland, including one of them not only 25 points, but even 50 points.
Housing loans in PLN and EUR in Poland
The latest KNF data shows that at the end of March this year. the value of housing loans granted in the Polish currency was PLN 125.04 billion, and its share in the value of all housing loans granted was 40.0%. In turn, for loans in euros it was PLN 31.71 billion and 10.1% respectively. In addition, the value of housing loans granted in EUR accounted for 16.9% of the value of all housing loans granted in foreign currencies.
In turn, according to the AMRON-SARFiN report for the first quarter of this year. the share of the value of newly granted housing loans in PLN in the value of all newly granted housing loans was at this time equal to 84.20% and was by almost 7.2 percentage points. higher than in Q4, when it was 77.04%. In the case of loans denominated in euro, there was a decline of over 2.5 percentage points in the same period. to 14.65% from 17.17%.