The time of higher interest rates is coming. How much will your loan installment increase?

What are interest rates?

The current interest rates of the National Bank of Poland are determined by the Monetary Policy Council. With its decisions, this body significantly influences the situation of borrowers in various banks, and more broadly – the situation of the entire economy. Thanks to the article you can easily identify the bank based on the account number, but in practice all of them depend on the actions taken by the Monetary Policy Council. If interest rates rise, the cost of your loan increases too. The greater the amount of the commitment, the more severely you will feel it.

The most important interest rates of the National Bank of Poland include:

· Reference, which has been defined since 1998, which means the minimum price of open market operations between banks – it applies to short-term securities;

· Lombard rate, which has been determined since 1992, meaning the price offered by the NBP to commercial banks for loans secured by securities (it is the lombard rate that is the basis for determining the maximum interest rate on loans and borrowings);

· Other – deposit, rediscount, bill discount, which have a smaller impact on the situation of borrowers.

Current interest rates in Poland

In 2020, in response to the effects of economic constraints justified by the declaration of a pandemic, the Monetary Policy Council reduced the reference rate to a record low of 0.1%. The lombard rate was also set at a surprisingly low level of 0.5%. For comparison, exactly 20 years earlier, in 2000, the reference rate in the second half of the year was 19%, and the lombard rate as much as 23%.

Such a significant cut in interest rates affected borrowers who were more willing than ever to queue up to the banks. But nothing lasts forever. On October 7, 2021, the reference rate increased to 0.5%, and from November 4, it is already 1.25%. The lombard rate in the same period jumped to 1%, and then to 1.75%. For more economic facts, tips, and financial news, please visit in the “financial guide” section.

Your credit in times of rising interest rates

You do not need any advanced economic knowledge to accurately forecast rising interest rates in the coming months and years. The thing is that each increase hits the pocket of the person with credit and loan obligations. In fact, even the repayment of small loans (you can find their Christmas ranking at may coincide with further interest rate hikes.

Suppose you have the prospect of a 30-year loan repayment for an amount of PLN 300,000. The current annual interest rate is, for example, 3%, so the current installment is less than PLN 1185. It is enough that the annual interest rate will increase by 2 points. percent (it’s easy to imagine it). The problem is that the new installment would be less than PLN 1,520. Over PLN 330 of the difference within the 1st installment. And if the rates increase to 10%, a single loan installment will cost you … PLN 3200. Hard to imagine? Yes, but it is theoretically possible – let’s hope that such interest rate caps will indeed remain a theory.

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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