Investors’ predictions are measurable. Derivatives are useful here, and more specifically – forward rate agreements (FRAs). This is called a contract for a future interest rate. In this way, market participants estimate what the main rate in Poland will be, e.g. in a year.
Let’s look at a 6×12 FRA contract, which could be the equivalent of a 6M WIBOR rate. The same one many banks today use it to set their mortgage rates.
Today, WIBOR 6M fluctuates around 2.80%, but is gradually growing. The analysis of the FRA contract allows us to conclude that the market in a year it expects a level of 4.12 percent. This means that WIBOR will be 50% higher than today, and a few weeks ago this contract indicated even 4.31 percent. In the case of the 3M WIBOR rate, forecasts today are 3.99%.
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This is what FRA 6×12 contracts look like today
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If Glapiński talks about even higher levels, it is not difficult to guess that he means rates at the level of 5%. It is worth noting that WIBOR is usually higher than the reference rate announced by the MPC. Today the rate is 2.25 percent, and WIBOR – over 3 percent.
What does this mean for borrowers? A disaster. If such a scenario were to come true, the installment of a sample loan, taken for 25 years and the amount of 300 thousand. zloty would be over 2.1 thousand zloty. And at the beginning of October 2021, the same loan meant an installment of “only” 1.3 thousand. zloty.
In the case of a loan for 400 thousand. PLN monthly commitment would jump from 1.7 to 2.8 thousand zloty. It’s 65 percent. raises in just a few months.
An even worse scenario for borrowers is the increase in the WIBOR rate to 6%. In this case, the loan installment is 2.3 thousand and 3.1 thousand, respectively. zloty. This is an increase of approx. 80 percent.
Let us remind you that the Monetary Policy Council decided on pay rises at the last four meetings. As a result, the reference rate increased from 0.1 percent. in October to 2.25 percent. in January.
