The Monetary Policy Council is ready to increase interest rates. What about mortgage loans?
Mortgage loan holders, but also the entire economy, are closely listening to the information coming from the Monetary Policy Council regarding interest rates. One of the MPC members shared his predictions for the second part of 2026.
“I do not expect further interest rate cuts due to geopolitical uncertainty. In my opinion, a more likely scenario by the end of the year is a rate increase,” said MPC member Przemysław Litwiniuk, quoted by PAP Biznes.
The Monetary Policy Council is ready to increase interest rates. What about mortgage loans?
Litwiniuk also added that “price phenomena caused by the conflict in the Middle East” may have a huge impact on the MPC's decisions. The expert explained that if they led to “unanchoring or a threat of unanchoring of inflation expectations and an increase in the risk of impact on prices and wages, the Council should be and is ready to increase interest rates,” Litwiniuk said.
See also: The Minister of Finance clearly responds to Americans regarding the new tax
The member of the Monetary Policy Council also added that almost no one in the Monetary Policy Council is currently in favor of the increase scenario. “The July projection will be the first document that will open a period of reflection. July will show us something, but as I said, it will open a period of reflection, I do not expect a decision in July,” Litwiniuk added.
In May, the Monetary Policy Council maintained the reference rate at 3.75%. “We would like the currently programmed rate level to do its job in bringing and maintaining inflation to the target of 2.5 percent.” – said Litwiniuk.
The MPC member directly predicts what will happen next with interest rates
“The time to reduce interest rates has passed and we are currently thinking about maintaining the current level or – in a less likely scenario – about the need to raise them. (…) The current inflation and energy shock are of a supply nature, and the geopolitical situation is so independent of us that we can primarily observe the incoming data, remain vigilant and apply a wait-and-see strategy,” MPC member Marcin Zarzecki told PAP Biznes in recent days.
See also: Interest rates up or down. What does this mean for your mortgage?
“The probability of reducing interest rates in 2026 has clearly decreased. The probability of maintaining or raising them has undoubtedly increased. The baseline scenario assumes an extension of the pause until the end of 2026. This is supported by the continuing uncertainty as to the durability of the oil shock and the forecast core inflation of approximately 3% yoy,” Zarzecki added.
How do interest rates affect a mortgage loan?
The mortgage interest rate consists of the bank's margin and the base rate (e.g. WIBOR, soon POLSTR). It is the base rate that changes with the decisions of the Monetary Policy Council.
When rates rise, the loan installment goes up. When rates fall, the loan installment decreasesbecause interest is calculated based on the lower interest rate. Higher rates mean higher installments and lower creditworthiness. When rates fall, banks can lend more because the installments are lower.
It is worth remembering that the installment is updated according to the schedule specified in the contract (e.g. every 3 months for WIBOR 3M). This means that actually lower or higher installments may appear for borrowers only after some time.
