The Polish Financial Supervision Authority reminds:

• A loan consists in a specific sum of money being given to the borrower with the obligation to repay it within specific time limits and with remuneration for the capital being made available. The remuneration is expressed in the loan’s interest rate and, as a rule, depends on the market price of the capital. The price, being determined by market forces, is not fixed over long term, which involves the probability of increase or decrease in the price (interest rate risk).
• Interest rate risk is particularly relevant for long-term financial agreements (such as mortgage loan agreements), since over the long term of such agreements (for example a mortgage loan granted for 25 years) the economy may experience multiple changes in interest rates, both increases and decreases.
• The market of long-term mortgage loans offers loans with a floating rate, fixed rate or periodically fixed rate, characterised by various levels of interest rate risk. Banks allow clients who have a home loan based on a floating interest rate to change the rate into a fixed or periodically fixed rate.
• Before choosing the loan’s interest rate model, one   should carefully read the conditions proposed by the bank. Every solution has its pros and cons (see examples in the table below). It is crucial to be aware of all the risks and consequences of each decision. The choice of the interest rate should take into account all conditions.
• The greatest advantage of fixed interest rate is the PREDICTABILITY of one’s own financial burdens related to credit obligations, i.e. knowing exactly the level of the current instalment throughout the term of the fixed interest rate.
• On the other hand, one should bear in mind that when taking out a fixed-rate loan (or converting it from a floating-rate loan into a fixed-rate loan), one must not count on a reduction of payable instalments where the benchmark applied to floating-rate loans goes down. One should think carefully which solution is best, considering the long period for loan repayment and the period for which the fixed rate is being set!
• Before signing the agreement, one should carefully read it and make sure one understands all its conditions, in particular: the type and amount of the interest rate (including the margin for loans with a floating interest rate), the type of instalment (equal vs. degressive instalments), the commission and other additional costs, the conditions for early repayment, the conditions for switching to a floating rate when the period of the fixed rate comes to an end (in the case of loans with a periodically fixed rate). Before assuming such a material obligation for many years, there is value in taking enough time and effort to analyse the terms of the loan agreement and make one’s own judgement as to each parameter of the agreement and risk factors.
• The bank should provide information about all the risk factors involved in the loan being offered to you. For mortgage-backed loans with a floating rate, the bank should provide a simulation of the loan costs for various levels of the reference rate. In case of any doubt, one should ask questions and expect the bank to give clear answers.