The obvious consequence of having the lowest interest rates in history is attractive loan rates and an unsatisfactory level of interest on bank deposits for savers. However, if you look more closely, not only from the perspective of nominal values but also relative ones, the assessments are no longer so clear-cut.
According to NBP data, the average interest rate on consumer loans for a period of 1 to 5 years is currently 7.6 percent, which is half as low as ten years ago (in February 2007 it reached 14.4 percent). At the same time, the interest rate on deposits with a term of up to two years fell from 2.8 to 1.6 percent, i.e. by almost 43 percent. In the period preceding the global financial crisis and in its first phase, these proportions changed quite clearly in favor of deposits. Banks needed customers' money to keep up with lending during the economic boom, and after the downturn, deposits became a valuable source of capital, which became difficult to access on the market. At the turn of 2008-2009, they were ready to pay savers as much as 6.5 percent per year. With loan rates reaching 14-14.5 percent at the time, they still achieved a decent margin. It has shrunk from about 8 percentage points then to 6 percentage points now, so contrary to bankers' complaints, not so drastically after all.
Now the situation is such that despite record-low interest rates, a decent economic situation and an approaching revival in investment, demand for credit is low, and there is plenty of money in banks. So there is no chance that deposit rates will go up, especially since the Monetary Policy Council firmly declares that it will not raise rates for at least ten months, and perhaps longer. If you add accelerating inflation to this picture, savers with the most cautious approach, i.e. those using bank deposits, are doomed to a real loss in the value of their capital.
The situation is completely different in the case of consumer loans. First, it should be noted that their average interest rate (7.6 percent) is not so far from the maximum permissible interest rate, which is currently 10 percent (twice the NBP reference rate plus 3.5 percentage points). Such a high level of average interest rates indicates that a large portion of loans are granted at the maximum rate. With interest reaching 10 percent in times of record-low interest rates, it is hard to say that a (consumer) loan is cheap. And after all, the cost of a loan consists not only of interest, but also other elements such as commissions and other fees. The total cost of the loan is reflected in the so-called Annual Percentage Rate (APR), which takes all these elements into account.
According to the NBP, at the end of January it averaged 15.1 percent. Its level has also been declining for several years and is also the lowest in history. As recently as the end of 2012 it exceeded 22 percent. Interestingly, however, since the end of 2014 the ratio between APR and the average interest rate has been rising strongly, reaching its highest level since 2004, i.e. in thirteen years. Currently, as then, the cost of a consumer loan measured by APR is twice as high as the average interest rate alone. Previously, for many years (from 2006 to 2014), APR was only one and a half times higher than the interest rate. This means that now, in times of record-low interest rates, banks are securing profits largely by jacking up non-interest additional fees.
