However, they are still about two and a half times higher than they were two years ago. In August 2021, the average interest rate offered on new mortgages was 2.67 percent.
“It is still more about cosmetic adjustments than some dramatic change in the trend towards lower rates,” said Jiří Sýkora, a mortgage analyst at Swiss Life Select.
“To give an idea of the concrete impact on the wallets of people with mortgages – the mentioned drop in rates since May this year caused a difference of 276 crowns per month in the repayment of a mortgage of 3.5 million crowns with a maturity of 20 years,” he added.
The monthly installment of a mortgage loan for 3.5 million crowns agreed up to 80 percent of the estimated property price with a maturity of 25 years and an average offer rate of 6.19 percent fell by 118 crowns to 22,950 crowns.
“Mortgage loan repayments are falling as is the average offer rate for the third month in a row. The last time the average monthly mortgage payment fell below the threshold of 23,000 crowns was in October of last year, when it amounted to 22,991 crowns at an average mortgage offer rate of 6.2 percent,” explained Sýkora.
Waiting for the central bank
Mortgage rates have thus been hovering above the six percent threshold for a year and are falling by a maximum of tenths of a percent. Basically, since the central bank last increased two-week repo rates last June, they have stagnated. It is from the repo rate that interest on loans and credits, as well as savings products in banks, is derived.
Even in the coming months, the rates will probably not move. At least the banking board of the Czech National Bank is not considering it yet. Inflation, which caused them to rise, is falling, but slowly.
According to CNB Governor Aleš Michl, the debate on the drop in rates may come in the fall, but it will only be a debate, he emphasized. He also did not rule out the possibility of raising rates if domestic demand were to grow too much. “All options are open,” he said after the latest board meeting.
Jakub Seidler, an analyst at the Czech Banking Association, then estimated that the CNB will probably proceed with a slight rate reduction only at the November meeting. Due to the low liquidity in the market, December is usually a less suitable date for changing the cycle in the development of rates. Alternatively, the first rate cut could come as early as February, Seidler added.
Until now, those interested in housing could at least compensate for expensive mortgages by a drop in the prices of apartments and houses. However, according to an analysis by the real estate group European Housing Services, the prices of older properties in the Czech Republic rose again in the second quarter after a year of decline. Those interested in living in Prague and in the Central Bohemia region now have to pay extra.
On the contrary, the prices of apartments in South Moravia are falling, because people here traditionally prefer family houses.
Expensive mortgages push people into renting
2023-08-08 22:35:15
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