When assessing the attractiveness of a given term deposit offer, savings account or credit product, you pay attention primarily to interest rates. The problem is that during the term of the contract with the bank its amount may change.
This is characteristic primarily for mortgages. You also have to consider this in the case of a long-term cash or investment loan or bank deposit. The interest rate on such products may depend on the variable base rate, i.e. EURIBOR, LIBOR or WIBOR – depending on the currency in which they are settled.
Who is most important to?
WIBOR rates (in practice there are several – which will be discussed later), similarly to EURIBOR or LIBOR rates, may remain stable for many months. They can also change by several percentage points throughout the year. This means that it is difficult to predict the interest rate for next year. People who pay mortgage loans are the most interested in their current amount. For larger liabilities incurred for a long period, already small changes in the base rate often translate into an increase or decrease in the loan installment.
When it comes to deposit products, such as deposits or savings accounts, WIBOR changes are less noticeable. There are smaller amounts involved, shorter contract duration and relatively low interest rates. Any increase or decrease in WIBOR value usually translates into a small change in the interest received.
Who determines it and how?
WIBOR, or Warsaw Interbank Offered Rate, is nothing more than the interest rate on the Polish interbank market. In other words, it is the price at which commercial banks operating in Poland borrow money. If one of the banks wants to borrow funds from another bank (which is a participant in the WIBOR panel), it will pay him a remuneration equal to the WIBOR rate.
The WIBOR rate is a fairly stable parameter, but it is worth knowing that in reality its amount is determined almost every day, during the so-called fixing. On each business day at 11:00, the banks belonging to the WIBOR panel indicate the annual interest rate. This is the value at which they would be ready to borrow money to other commercial banks on a given day. After rejecting the two highest and the two lowest offers, the average interest rate per annum on the interbank market is calculated – WIBOR.