In a pivotal move for Polish borrowers, the Monetary Policy Council (RPP) announced on May 7, 2025, a significant cut in interest rates, reducing the reference rate by 0.5 percentage points to 5.25 percent. This marks the first reduction since October 2023 and comes at a time when many borrowers have been feeling the pinch of high monthly payments on their loans.
The decision to lower the rate is expected to bring immediate relief to millions of Poles with variable-rate loans tied to the WIBOR index, which has been declining since early April. Jaroslaw Sadowski, director of the Analysis Department at Rankomat.pl, explained that this cut could result in a decrease in monthly payments on a typical mortgage of 500,000 PLN by approximately 172 PLN. However, for loans based on the WIBOR 6M rate, which has fallen by 0.79 percentage points since April, the reduction could be as much as 271 PLN per month.
"Theoretically, such a cut will reduce the mortgage payment on a loan amounting to 500,000 PLN by about 172 PLN. In practice, in some cases, the decrease will be even greater," Sadowski noted. This is particularly relevant for those with loans indexed to WIBOR 6M, which has now approached 5 percent.
The implications of this rate cut extend beyond just monthly payments. The RPP's decision is also expected to enhance credit availability for potential homebuyers. Sadowski indicated that the reduction in rates would increase the maximum amount of credit available by approximately 5 percent. For instance, someone who could have obtained a loan of 500,000 PLN at the beginning of April may now qualify for up to 525,000 PLN. In cases of loans based on WIBOR 6M, this figure could rise even further, reaching up to 538,000 PLN.
As of now, the National Bank of Poland's interest rates are as follows: the reference rate stands at 5.25 percent, the deposit rate at 4.75 percent, the Lombard rate at 5.75 percent, the rediscount rate for bills of exchange at 5.30 percent, and the discount rate for bills of exchange at 5.35 percent. These changes reflect a broader trend as the market adjusts to the anticipated economic conditions.
The decrease in WIBOR rates has been notable, with the WIBOR 6M dropping by 0.7 percentage points and the WIBOR 3M by 0.5 percentage points between April 3 and May 6, 2025. This decline in WIBOR values is a direct response to expectations of a continued easing of monetary policy by the RPP, as indicated by Sadowski, who stated that further cuts are likely in the coming months.
However, Sadowski warns that the timing of these reductions will depend on when banks update their interest rates based on the new WIBOR figures. "The WIBOR 6M is updated every six months, while the WIBOR 3M is updated every three months. Depending on when the last update occurred for borrowers, some may see a reduction in their next payment, while others may have to wait longer for the benefits of the rate cut to materialize," he explained.
For older loans, particularly those taken out 15 years ago, the impact of the rate cut may be less pronounced. Sadowski pointed out that the changes in interest rates have a diminished effect on older loans, which may see a decrease of only a few dozen PLN in their monthly payments.
The RPP's decision has been met with optimism by current borrowers and those looking to enter the housing market. The prospect of lower monthly payments and increased loan availability could stimulate demand in the real estate sector, which has faced challenges in recent years due to rising interest rates.
Looking ahead, the economic climate in Poland is also being influenced by inflation rates, which have recently shown signs of easing. According to a quick estimate from the Central Statistical Office, inflation in April was recorded at 4.2 percent, down 0.7 percentage points from previous months. This decline in inflation may further support the RPP's strategy of easing monetary policy.
Economists from ING Bank Śląski have suggested that if the RPP continues on this path, there could be a pause in rate adjustments in June, with potential further cuts anticipated in July. They predict that by the end of 2025, interest rates could be reduced by a total of 125 basis points.
As the Polish economy navigates these changes, the implications for borrowers are clear: a lower interest rate environment not only eases the burden of existing loans but also opens the door for new opportunities in the housing market. The RPP's decision is a crucial step towards stabilizing the financial landscape for many Polish citizens.
