• Changing interest rates should each time result in the change of yield on WIBOR loans.
• Establishing a bottom limit for loan yield based on variable interest rate in breach of consumers’ interests is unacceptable.
• The signals heard by UOKiK prove that some banks decrease the loan yield only to the level specified in the agreement.

Mortgage loan yield is a derivative of an interest rate established by the Polish Monetary Policy Council and banks’ margin. From 17 March to 28 May 2020, the Monetary Policy Council decreased interest rates three times in a row and now they are at the level of 0.1%. This should correspond with lower loan instalments for borrowers. However, UOKiK has heard that some banks, by calculating loan yield based on new reference rates, decrease them solely to the threshold stipulated in the agreement - e.g. to 2 or 3 percent despite that - when the agreed margin value is taken account of - the loan yield should be lower.

- Let me appeal for fair settlements between banks and consumers. The interest rate risk should be distributed equally between the bank and the consumer. In the analysed situation of minimum interest rates, the lender’s risk is incomparably lower than the borrower’s risk related to the variable positive reference rate. Application of bottom limits should be assessed in the context of breaching good morals which are determined by best practices, such as, for example, “Banking Code of Ethics”. When interest rates are growing - the bank has the right to collect higher instalment, while in the reverse situation it should be reducing it - says Tomasz Chróstny, President of UOKiK.

UOKiK has been conducting explanatory proceedings pertaining to the manner of taking account, by banks, in their contractual provisions, of negative base rates in mortgage loan yields expressed in Polish zlotys. As a result of this analysis as well as taking account of the signals heard that pertained to the application of the bottom limit of loan yield when reference rates have dropped significantly, President of UOKiK, Tomasz Chróstny, submitted an improvement notice at Millennium Bank with respect to which he has heard the signals.

- As a consequence of those actions, Millennium Bank declared its change in establishing loan yield limits which is now being analysed. At the same time, I cannot promise that I will not take up any actions against some other financial institutions which are going to limit the bottom threshold of the contractual loan yield in the manner that is detached from the market reference rates - adds President of UOKiK.

The opinion of the Authority:

• The loan yield consists of the reference rate and the bank’s margin. Today, the interest rates are the lowest in history, which corresponds with lower instalments.
• If the reference rate level goes up or down, then the bank should re-calculate the loan yield, respectively.
• A loan with a bottom loan yield limit is less risky for a bank and as a consequence this should be reflected in a lower margin vis-à-vis the loans with no limit.
• Loan yield limits in loan agreements should be established in such a ways so as to distribute the risk of increasing or decreasing the reference rates level proportionally between the bank and the consumer.

Consumer, has your bank established a bottom loan yield in the agreement? File a complaint. You may also notify the Authority by sending an email to monitoring@uokik.gov.pl. Legal advice is provided free of charge by consumer ombudsmen at helpline number: 801 440 220 and via email at porady@dlakonsumentow.pl.

Consumer support:

Phone: +48 801 440 220 or +48 22 290 89 16 – consumer helpline
E-mail: porady@dlakonsumentow.pl
Consumer ombudsmen – in your city/town or district
Regional Consumer Centres: Phone: +48 22 299 60 90 – Dlakonsumenta.pl

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL