Subsequent interest rate increases keep borrowers awake at night. The eighth turn will be an insurmountable burden for many. End of pleasure, you have to tighten the belt – say the borrowers. There are those who have to sell a car or work hard to earn an instalment. “I don’t sleep at night”, many Poles say.
On Thursday, the Monetary Policy Council decided to raise interest rates for the eighth time in a row. The reference rate increases by 0.75 percentage points. It will be 5.25 percent. Most since 2008. But after all a bit lower than the forecast said.
“How much have your mortgage instalments increased?”, Katarzyna asks one of the groups devoted to mortgage loans, looking for consolation after Thursday’s MPC decision. Its instalment has increased by PLN 300 since October 2021, i.e. since the first interest rate hike.
“It may not be much for someone. For a single mother who lives on one salary, that’s a lot. In fact, I don’t know what will happen next. After the increases, the instalment takes up a third of my salary. It increased from PLN 700 to PLN 1000.
I stay awake at night and try to tighten my monthly budget. I am very worried about what will happen next and how the last increase will affect the amount of my instalment.” She says.
“Car for sale” because of rate increases
Katarzyna allowed herself two years ago. She sold the plot which she inherited from her father and took a loan to make the dream of a house of her own come true with your daughter. Until now, they lived in one room, renting a studio apartment.
Katarzyna knew it would cost her a lot of sacrifices. She had been alive for a long time, not allowing herself much, so as not to have to worry about the empty wallet before the next paycheck. Now an additional PLN 300 is dropping from her monthly budget.
Also fees went up: rent, gas, energy. “Instalments and fees cost me almost 1800 PLN. I am afraid that I will not be able to cope with further increases. I have a list of things to sell. The first will be the car. And so, due to rising fuel prices, I hardly drive it. I will do everything not to let us lose our flat” She says.
Working beyond strength
Angelika worries about the future of her family. “My husband and I took out a loan in the amount of 293000 PLN for 30 years. For the first 3 years, we had to pay an instalment of 554 PLN, after that 1300 PLN. At the beginning of April, we received information that the instalments had increased to 1700 PLN! Angelika says.
The couple did not expect such gigantic increases. “We were surprised. Our advisor kept saying that we have nothing to fear”, she says. The couple do not know what will happen next.
We still have to finish the house, and in the current situation we cannot afford it. We live with the children on the ground floor, the entire floor, including the stairs, is waiting to be finished.
The future is going to be really hard. My husband is already working too hard, and I am making extra money at home so that we can afford fees and living expenses. I am very afraid of further increases” she says.
500 zlotys to live for
Zuzanna’s instalments jumped from 2000 PLN up to 2600 PLN. She took out a loan for 120000 PLN for eight years. “After paying the bills, I have 500 zlotys to live for. I never expected to be in this situation”, she says sadly.
Paulina is also in a difficult situation. Its instalment of 1100 has grown to 2600 PLN. ”Of course, we were aware that the instalments would increase, but probably no one expected such amounts,” she says. She and her husband took out a loan for 35 years in the amount of 375000 zloty.
They are afraid of what their instalment will look like after the eighth raise. “It’s already hard to make ends meet, no pleasures.”, she says.
Borrowers look for support in various groups, they start looking for ways to reduce instalments, because everyday expenses cannot be avoided. “I can wear old clothes, but I have to eat” says Zuzanna. The worst thing, she says, is that she ‘s young, she should enjoy life, and she worries about whether she will have anything to cook her dinner at the end of the month.
Many borrowers give up, as evidenced by the growing number of houses in a shell for sale or apartments to be finished. But increasing loan instalments can have a much more painful effect.
“The progressive increase in the cost of servicing financial obligations, including credit obligations, may significantly worsen the mental condition. Previous circumstances, such as a pandemic, also contributed to this.
An acute mental crisis is usually preceded by an increase in anxiety and mobilisation to cope. A breakdown occurs when problems overwhelm our individual capabilities and resources# says Roman Pomianowski, psychologist, member of the Alimony Team at the Human Rights Defender, initiator of the Debt Support Program in Poznań.
As he says, the key word here is “too”. “Too many problems are threatening, too serious and lasting too long. Unfortunately, the chronic threat to the sense of security and personal agency can break anyone , contrary to appearances, also the toughest, for whom personal “bankruptcy” appears as a personal or family crash” adds the psychologist.