Poland has become the leader in a European ranking, but there's little reason for celebration as it pertains to the interest charged on mortgage loans. According to data from May 2024, Polish banks impose the highest fees for housing loans in the European Union. The average interest rate on newly granted housing loans in Poland is 7.83%, while these fees are about half as high in Western European countries.

The data, made available by the European Central Bank (ECB), was graphically compiled by 300gospodarka.pl. The illustration shows that no other EU country has such high interest rates on housing loans as Poland. Poland has long been at the forefront of this ranking, previously competing with Hungary. However, the Hungarian National Bank has recently implemented a series of interest rate cuts.

There are two leading causes for this situation. The first is the high interest rates maintained by the Monetary Policy Council (Rada Polityki Pieniężnej, RPP). Despite inflation falling to the National Bank of Poland's (NBP) target (2.5 per cent plus/minus one percentage point), these rates have remained unchanged since 2023. Poland's Interest rates are significantly higher than those of the euro area, where the European Central Bank has just begun to ease monetary policy. Consequently, high interest rates lead to persistently high loan rates.

According to the ECB, the National Bank of Poland (NBP) interest rate has remained unchanged since October, yet the average interest rate on new loans has slightly increased in recent months. With the base interest rate steady, banks have raised the margins they charge on new mortgage loans.

Economic journalist Marek Chądzynski suggests that banks felt they could raise margins due to anticipated increases in loan demand. He cited the NBP's predictions in its financial system stability report, based on the forthcoming 'NaStart' housing programme.

This new programme, heavily promoted by the government, is expected to drive up housing prices in Poland. Additionally, the NBP forecasts an increase in household incomes, which would enhance customers' solvency and further support banks' expectations for higher loan demand.

Source: 300gospodarka.pl