Poland launches new standard for floating mortgage rates

Poland begins practical transition from WIBOR to the new POLSTR index in housing lending. The country's largest bank PKO BP is first to launch variable-rate mortgage loans for individuals linked to POLSTR, and from 2027 the new index is to become the standard for new financing.

As Business Insider Polska reports, from September 3, PKO BP and its subsidiary PKO Bank Hipoteczny will start offering new variable-rate mortgage loans based on the POLSTR 1M Stopa Składana index. The group will become the first on the Polish market to use POLSTR in new housing loan agreements for individuals.

Rate will change monthly

One of the main differences for borrowers will concern the frequency of interest rate review. POLSTR 1M Stopa Składana is calculated on the basis of daily POLSTR values for the previous month. Therefore, the rate on such a loan will be reviewed monthly.

With the currently common WIBOR 3M or WIBOR 6M, the rate changes respectively every three or six months. Thus, payments on new loans with POLSTR will react more quickly to changes in interest rates on the Polish market.

POLSTR itself - Polish Short Term Rate - is gradually to replace WIBOR as the main Polish indicator for determining floating interest rates. Unlike WIBOR, it is based on actual short-term transactions on the financial market. The administrator of POLSTR, as of WIBOR, is GPW Benchmark.

From 2027 transition will accelerate

The launch of PKO BP's product is the first noticeable step in the transition of the retail credit market to the new index. Other large banks are also preparing relevant products, but have not yet begun to mass-offer mortgages with POLSTR to individuals.

Bank Millennium plans to gradually migrate products currently based on WIBOR to POLSTR by the end of the year. BNP Paribas expects to launch relevant solutions for individuals and businesses in the fourth quarter of 2026. Bank Pekao already uses POLSTR for some corporate and business lending and is working on products for the population.

According to the reform roadmap, from the beginning of 2027, new financing is to move to POLSTR, while WIBOR will continue to be used mainly for servicing previously concluded agreements.

Therefore, owners of existing WIBOR mortgages should not expect automatic index change from January 1, 2027. The main rates WIBOR 1M, 3M and 6M are planned to continue to be published for servicing old agreements during a long transition period - until the end of 2036.

For future borrowers, it is important that the value of POLSTR itself does not determine the final cost of a mortgage: the loan interest rate, as before, will consist of the relevant index and the bank margin. Therefore, it is worth comparing bank offers by the full rate and other contract conditions, not just by the POLSTR value.

Based on materials: Business Insider Polska, PKO Bank Polski