Mortgages in Poland remain among the most expensive in Europe, a fact repeatedly emphasized by politicians and experts alike. This situation stems not only from the level of interest rates but also from the relatively high bank margins. According to Monetary Policy Council (RPP) member Prof. Ireneusz Dąbrowski, while the Council can influence interest rates, regulating bank margins is far more difficult and unlikely to succeed.
“Banks have incurred significant costs due to Swiss franc mortgage litigation and rulings from the Court of Justice of the European Union (CJEU), and they’re now trying to recoup those losses through higher margins at the expense of customers,” explains Prof. Dąbrowski in an interview with Newseria. “Shareholders should bear part of these losses, but bank management boards have decided to apply higher margins on mortgages compared to other countries, which results in higher costs for clients.”
The margin is the fee added to the market interest rate (formerly WIBOR) to form the variable interest rate on a mortgage. In June 2025, average mortgage interest rates ranged from 7–8% depending on the bank, type of loan, and rate structure—while the reference rate stood at 5.25%. Following a rate cut in July to 5.00%, 3M and 6M WIBOR fell below 5%, bringing mortgage rates below 7% in some banks.
“The Monetary Policy Council can cut rates when inflation falls—as we’re doing now—which will eventually reduce loan installments. However, we have no control over banks’ margins,” Dąbrowski adds. “Reducing credit costs through state or regulatory intervention is very difficult. Market players will always find ways to bypass such rules. Imposing a fixed maximum margin wouldn’t work in practice.”
Legal Risk Drives Up Mortgage Margins
According to the Polish Bank Association (ZBP), the average mortgage margin in December 2024 stood at 1.7%. Legal risk—primarily linked to litigation over Swiss franc loans and now Polish złoty loans—accounted for 0.81 percentage points of this margin, more than credit risk itself. This is highly unusual in a European context. An additional 0.24 percentage points comes from the bank tax.
ZBP emphasizes that the correlation between mortgage interest rates and the reference rate exceeds 96%, making the reference rate the key determinant of borrowing costs.
Transition from WIBOR to POLSTR
Poland is now undergoing a reform of its reference rate system. The longstanding WIBOR rate is being phased out and replaced by POLSTR (Polish Short-Term Rate), in compliance with the EU’s Benchmarks Regulation (BMR).
“The switch from WIBOR to POLSTR should be smooth. It might only require annexes to loan agreements, or perhaps the change will take effect automatically through legal provisions. There’s nothing to worry about—it’s a positive, much-needed reform. The new benchmark will finally be more transparent,” says Prof. Dąbrowski.
POLSTR is based on actual overnight deposit transactions between financial institutions. Since June 2, 2025, GPW Benchmark has been publishing POLSTR and its compound indices (1M, 3M, 6M). These are “backward-looking” benchmarks, meaning they reflect changes in economic conditions and past interest rate shifts. This distinguishes them from WIBOR, which is a “forward-looking” rate based on market expectations.
Switching to POLSTR will not invalidate existing mortgage contracts based on WIBOR. However, Polish courts have already begun receiving lawsuits from borrowers questioning the transparency of WIBOR, raising legal uncertainty.
“Legal risk surrounding WIBOR is difficult to assess, especially with the CJEU involved. Just like with the Swiss franc cases, it’s the CJEU that will ultimately decide, and its rulings are often unpredictable—sometimes pro-consumer, sometimes not,” says Prof. Dąbrowski. “We must wait for the CJEU’s judgment, which Polish courts will then implement. At this stage, any outcome is possible.”
Awaiting the CJEU Ruling
On June 11, 2025, the CJEU held a hearing on mortgage loans in PLN indexed to WIBOR. The Advocate General’s opinion is expected on September 11, 2025, and a final ruling is likely in the first half of 2026.
“At this stage, the legal uncertainty surrounding WIBOR has no major financial impact. But once there’s a ruling, banks will need to create legal reserves, which will reduce profits,” explains Dąbrowski.
Since early 2020, Polish banks have been setting aside reserves for Swiss franc mortgage litigation. These costs are projected to exceed PLN 100 billion in 2025. Despite expectations that the problem would fade, it is growing: according to Rzeczpospolita, the five largest listed banks allocated PLN 3.3 billion in reserves for FX mortgage risk in the second half of 2025—50% more than in the first half.
