European Court of Justice upholds WIBOR-based loan structures, preventing market-wide financial disruption.
TSUE Ruling on WIBOR-Based Loans
On February 12, the European Court of Justice (TSUE) responded to questions from a Polish court regarding a case involving mortgage loans interest rates tied to WIBOR. In its ruling, the Court determined that the transparency requirement prescribed in the directive does not impose on banks the obligation to provide consumers with detailed information about the methodology of reference rates, such as WIBOR.
Market Reaction
Otodom expert Katarzyna Kuniewicz noted that the TSUE ruling in this case was long-awaited by the Polish housing market. “From a market perspective, the key point is that the EU judicial body found no grounds to question the very structure of these contracts. In other words, we will not face a scenario like the one we know from the Swiss franc loan market,” she emphasized.
Could a Swiss Franc Scenario Have Happened?
Kuniewicz pointed out that maintaining the current rules is important because a significant portion of housing in Poland is financed through mortgage loans. “If the TSUE had invalidated WIBOR rates, it could have caused a shock on a scale even larger than what we experienced with Swiss franc loans, despite the fact that mainly fixed-rate loans have been granted in the last year,” she assessed.
Current Mortgage Market Structure
The expert noted that currently about 75% of granted mortgage loans have fixed interest rates, while only 25% are based on the WIBOR rate. “It might seem that the issue concerns only one-fourth, or a smaller part of the market. However, this is not the case, as just a few years ago we had periods in which almost all granted loans were based on WIBOR. The number of active contracts remaining in the system and dependent on WIBOR levels is therefore significantly higher,” Kuniewicz explained.
Banking and Housing Market Stability
As the housing market specialist indicated, the TSUE ruling sends a clear signal that in the case of WIBOR, there is no analogy to the situation known from Swiss franc loan cases. Loan repayment amounts will therefore still depend primarily on decisions of the Monetary Policy Council and interest rate levels. “There are no grounds for the mass questioning of contracts that we saw in the case of Swiss franc loans. This path seems currently closed,” Kuniewicz commented. “From an economic point of view, this is an important moment of calming the situation.”
