“It can be seen that even the reduction of the basic interest rate by the CNB will not convince the banks to more drastically discount mortgages,” said Swiss Life Select analyst Jiří Sýkora.
According to him, it may be the banks’ reaction to the new setting of compensation for early repayment of the mortgage. From September they will be able to charge a new fee for this, but it will only be half of what they lobbied for. “From the beginning, the banks were pushing for two percent of the repaid amount, however, the legislators decided that it would be only one percent. “The banks already talked about the fact that if this amount is lower than two percent, they will have to create a bigger cushion for the losses associated with it,” said Sýkora.
From January, the CNB will relax the rules for providing mortgages
According to him, this cushion is created by a higher interest rate at the expense of all new clients. “Nevertheless, it can be expected that even in the coming months, mortgage interest rates will continue to gradually decrease,” he added.
The monthly installment of a mortgage for CZK 3.5 million, arranged for up to 80 percent of the real estate price with a maturity of 25 years and an average offer rate of 5.96%, fell by CZK 117 to CZK 22,472 in January. Compared to last January, it decreased by more than CZK 800. Compared to June 2022, when the average rate was 5.71% and was last below the six percent threshold, it is still CZK 550 higher.
A more pronounced decline in loans for young people
In January, mortgages for young people under the age of 36, which banks can provide even above 80 percent of the property’s mortgage value (LTV), saw a more significant reduction in rates. Mortgages fixed for three and five years per month fell by 0.21 percentage point to six percent, or 5.93 percent per year.
The decline in mortgages granted up to 80 percent of the property’s value was more moderate. Mortgages with a one-year and ten-year fixation fell by five basis points to 6.31 percent and six percent, respectively. Mortgage rates fixed for three and five years then fell by six points to 5.81 percent, or 5.74 percent. Thus, mortgages with a five-year fixation and an LTV of up to 80 percent remain the cheapest on the market.
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2024-01-08 23:30:00
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