Falling interest rates have triggered the largest wave of mortgage refinancing seen in Poland for years. A growing number of borrowers are switching banks to reduce their monthly repayments. Experts from property portal RynekPierwotny.pl and mortgage intermediary GetHome Finance explain when refinancing can generate the greatest savings.
“At first glance, it may seem that Poles are once again rushing to take out mortgages. Banks certainly have their hands full, but an increasing proportion of new mortgage loans are being used not to finance home purchases, but to repay older, more expensive loans,” says Marek Wielgo, an expert at RynekPierwotny.pl.
According to Poland’s Credit Information Bureau, or BIK, banks granted approximately 130,000 mortgage loans during the first five months of the year, nearly 50% more than in the corresponding period a year earlier. A significant part of this increase, however, was driven by refinancing.
A year ago, only around 14% of newly issued mortgages were used to repay existing loans. Today, that share has risen to approximately one-third, reaching as much as 35% in April and May. Refinancing has probably never accounted for such a large proportion of Poland’s new mortgage market.
“The reason is simple. The vast majority of people who took out mortgages in 2023 and 2024 chose temporarily fixed interest rates, usually for a five-year period. Following a series of interest-rate cuts, newly available mortgages carry substantially lower rates. For many borrowers, this creates an opportunity to reduce their monthly repayment by several hundred zlotys,” Wielgo explains.
According to data from the National Bank of Poland, the average interest rate on new mortgages is currently just below 6%. By comparison, borrowers taking out mortgages in 2023 and 2024 frequently accepted rates of between 7% and 8%, and sometimes even higher.
The difference therefore remains large enough to make refinancing financially attractive for many households.
“When a mortgage is worth several hundred thousand zlotys, reducing the interest rate by one or two percentage points can generate monthly savings of several hundred zlotys. It is therefore hardly surprising that a growing number of people are asking about transferring their mortgage to another bank,” says Andrzej Fluderski, a management board member at GetHome Finance.
Refinancing will not benefit every borrower
Fluderski notes that, somewhat paradoxically, the biggest beneficiaries of the current refinancing wave are not necessarily those who took out temporarily fixed-rate mortgages when interest rates peaked in 2022. Instead, borrowers who arranged their loans in 2023 and 2024 may have more to gain.
People who took out mortgages in 2022 will soon reach the end of their five-year fixed-rate periods and will then be able to negotiate new terms with their current banks. This does not mean, however, that they must wait. They can already approach their lender and request a reduction in the interest rate.
Borrowers from 2023 and 2024 may have considerably greater potential savings. Banks issued approximately 375,000 mortgages during those two years, and the vast majority of customers selected temporarily fixed interest rates.
Many of these borrowers still face several years of repayments on comparatively expensive loans. Refinancing could therefore provide them with the greatest financial benefit.
The GetHome Finance expert stresses that refinancing is not free. Borrowers may need to pay for a new property valuation, court fees related to changes in the mortgage register and temporary bridging insurance until the new bank’s security is formally registered.
In some cases, the existing lender may also charge an early repayment fee. Many borrowers can avoid this cost, however, depending on the age of the loan and the provisions contained in their mortgage agreement.
The total cost of refinancing may range from several hundred to several thousand zlotys, depending on the bank and the terms of the original loan agreement. In practice, the total expense most commonly ranges from approximately PLN 1,000 to PLN 4,000.
The largest costs are usually associated with the property valuation and the establishment of a new mortgage security. Before making a decision, borrowers should therefore calculate how many months of lower repayments will be required to recover the initial expenses.
Consider, for example, a PLN 600,000 mortgage taken out in 2024 for a 30-year term at an interest rate of 8%. Reducing the rate to 6% through refinancing could lower the monthly repayment by approximately PLN 800.
Even if the entire refinancing process costs between PLN 3,000 and PLN 4,000, the initial expenditure could be recovered within approximately five months.
Negotiate with your current bank before switching
Transferring a mortgage to a competing lender is not always necessary. The growing popularity of refinancing has prompted banks to pay much closer attention to the arguments presented by their existing customers.
A borrower who presents an offer from a competing bank may sometimes be able to negotiate a lower interest rate or other more favourable conditions without completing the entire refinancing process.
The first step should therefore be a conversation with the current lender. The initiative, however, must come from the customer. Only when the bank’s proposal proves insufficiently attractive should the borrower seriously consider moving the loan elsewhere.
Fluderski expects competition among banks to intensify this year. The number of people seeking to purchase a home is likely to be lower than during the market rebound that followed the first interest-rate cuts.
In this environment, borrowers who already have mortgages, repay their instalments regularly and can easily transfer their debt to another institution are particularly attractive customers for banks.
In addition, many lenders allow borrowers to include the costs of refinancing in the new mortgage. As a result, a lack of savings does not necessarily have to prevent a customer from switching lenders.
Source: CEO.com.pl
