If someone remembers the end of the 90s and the beginning of the current century, then you may be shocked to see today’s interest rates. The NBP reference rate, on the basis of which the maximum interest-bearing loans in Poland is determined, is currently 1.5 percent. And at the beginning of 2001 it was 18 percent, which is over ten times more!
Low interest rates are on the borrower’s hand. Thanks to them, they have cheaper access to money. They pay lower interest. This has not always been the case and it will not always be the case.
Consumer loans and credits
Nominal interest rates on loans in Poland from the beginning of 2016 may not exceed twice the reference rate of the National Bank of Poland (it is currently 1.5% per annum) increased by 7 percentage points. In other words, the interest rate on loans in Poland cannot currently exceed 10 percent. annually.
Of course, banks may charge additional fees, e.g. commission for granting a loan or insurance premiums, which ultimately increase costs, but the nominal interest rate cannot exceed 10%. annually.
This is great news for people looking for consumer loans and credits with a shorter repayment period with a fixed interest rate. With good offers, they are able to borrow cash on very attractive terms, “booking” low nominal interest rates for several years ahead and keeping other loan costs under control.
All types of promotions that combine low interest rates with exemptions from additional costs are particularly attractive. A consumer loan or credit card created this way is a real bargain.
The period of low interest rates is also conducive to consolidation of liabilities incurred at a higher interest rate. Benefits can be achieved not only because of lower interest on the remaining debt, but also because of the ordering of liabilities in one bank and adapting them to our current situation. This simple operation can help reduce your home budget’s credit burden while increasing convenience.
Low interest rates can also be seen in the mortgage interest rate, which is based on the rates of short-term interbank Euridor loans. The problem is that these are variable rates and may increase in the future. Unfortunately, there are no fixed rate mortgages in Poland. It is impossible to “reserve” today’s record low interest rates for several or several dozen years ahead.
Moreover, banks benefit from a period of low Euridor rates and increase their margins. This is the second component of the mortgage rate. Unfortunately, this component is stable throughout the contract period.
That is why it is worth being careful when taking out a mortgage. Low interest rates that borrowers enjoy at the moment may not persist throughout the loan repayment period. A bank’s margin should be a much more important factor when choosing a loan offer when buying real estate – the lower, the better.
A good period for borrowers
Low interest rates are the wind in the sails of borrowers – the possibility of taking new loans or consolidating old ones at attractive rates. In combination with temporary promotions in banks, e.g. commission or insurance, it creates good opportunities. A little more cautious approach to mortgage loans, because in their case in the long run the most important thing is the bank’s fixed margin.