The first bank introduces loans based on the WIRON rate. He cut his credit for six months

At the beginning of December 2022, ING Bank Śląski, the fifth largest bank in Poland, announced the suspension of the sale of mortgage loans with floating interest rates. The decision was dictated by the expectation of a new base rate after Prime Minister Mateusz Morawiecki announced last May that he was phasing out WIBOR.

WIBOR turned out to be unreliable

Withdrawal from WIBOR became a necessity, as it was confirmed that this indicator is completely unreliable and the calculation of monthly payments based on it is unfair to customers.

All this time, ING Bank Śląski has been selling loans at a fixed rate. Holders of such loans need not worry that their monthly payments will increase as a result of the Monetary Policy Council’s interest rate hike. Peace of mind, however, comes at a cost: fixed-rate loans are more expensive than floating-rate loans, so they have been little popular over the years. It wasn’t until after the turmoil caused by a series of hikes that banks began to promote them, and some, like ING, withdrew floating-rate loans altogether. You should also be aware that the fixed rate is valid only for the first few years after the conclusion of the loan agreement.

WIRON 1M means the repayment schedule can change every month

From June 26, customers will again be able to apply for a variable rate loan with ING, but it will be based on the WIRON 1M compound rate. The interest rate will consist of:

• reference indicator WIRON 1M Folding foot

• bank margin.

The “1M” in the name means that the client’s repayment schedule will change every month and take into account the changing amount of the coefficient. So far, loans have been based on a 3M or 6M ratio. Therefore, the amount of the installment plan changed three to six months after the KNF announced an increase in the interest rate, which was beneficial for customers. However, this also works in reverse: just a few months after the rate cut is announced, customers will pay less.

Loans with a fixed interest rate remain in the bank’s offer

“The WIRON 1M compound rate is determined in accordance with the WIRON Composite Index Family Rules. The index administrator is GPW Benchmark SA with its registered office in Warsaw.

Mortgage loans with periodically fixed rate will continue to be available in the offer. The fixed interest rate is valid for 60 months from the date of issuance (payment) of a mortgage loan or its first tranche. After this time, the client will be able to take advantage of the new fixed interest rate for the next 5 years. If he does not decide to continue the periodic fixed interest rate, then the further period of the loan will be covered by a variable interest rate consisting of the WIRON 1M compound rate and the bank margin.