We will start with a fundamental issue, i.e. we explain what interest rates are. This is a complex issue and at the same time very simple. Simply put, the interest rate is the cost of money. For example: when we borrow one hundred and ten percent USD, we must give back one hundred and ten USD. It is worth emphasizing that there is no single interest rate in the economy, there is a whole range of them and this is what we want to present in the article below.
Interest rate on mortgages in Poland and in Western Europe
Nowadays, the state plays a huge role in the field of interest rates . The interest rate is set by the Central Bank and the Monetary Policy Council, which in Poland changes or leaves four main interest rates at regular meetings. Loans for people working in Australia or other countries that are granted in Poland should be considered in terms of interest rate. We are most interested in one interest rate – reference .
The vast majority of mortgages have a variable interest rate. Explaining this issue is worth knowing that the cost of a mortgage is two parts. The first of these is the bank’s margin, which in most banks is currently constant throughout the loan repayment period. The second part is the variable part, i.e. in Poland it is the so-called jabank. This is the interest rate at which banks borrow money among themselves. Jabank is a derivative of the reference rate, which is set by the National Bank of Poland and the Monetary Policy Council.
However, we are not entirely masters in our home. We mean that Poland cannot help but look at interest rate policy in Western Europe , which can be record low, almost zero, or even negative. We cannot set this policy arbitrarily. At present, the Monetary Policy Council in Poland is in no hurry to raise interest rates .
Mortgage rate in western Europe
In Poland, basically all loans are granted at a variable interest rate. The structure of loans in Western Europe is slightly different than in our country. One of the elements that differentiates loans in Poland and the west is the fact that in economically more developed countries, loans for working persons are granted at a fixed interest rate.
This means that a borrower who takes a loan from foreign banks can be certain that what is changing in Poland is not the case abroad. Thanks to this, the customer knows that the loan will actually be with a fixed installment and it will not be subject to dangerous fluctuations, which would be caused by a change in the Central Bank’s policy.