How will the early mortgage payment fee change from September? We have information from the banks – Měšec.cz

From September, banks will increase the fee for early repayment of the mortgage. This will be possible with the changes, and on their basis they will be able to show more of the costs they incur if they are paid back early to the specified fee.

More ways to pay without cost

The Consumer Credit Act allows v § 117 pay off consumer housing loan free:

• within a month before the anniversary of the mortgage contract, if the repayment is up to 25% of the total amount of the housing loan,
• during the three months after the credit provider informs you of the new interest rate proposal before the reform until the day of the reform,
• in the period when a fixed loan rate is not set,
• in a situation where you receive benefits from insurance intended to ensure the repayment of the loan,
• if the borrower or his spouse or partner dies, is sick or disabled, which leads to a reduction in his ability to repay the loan.

From September, this list will be expanded to include two more positions:

• that you are selling the property provided and at the same time it is valid that at least 24 months have passed since the housing loan agreement was negotiated,
• in the settlement of the joint property of the spouses during the divorce, if the subject of the settlement is also a real estate financed by a loan or served as collateral (and at the same time, at least 24 months passed from the settled home loan).

In addition, however, there will be a relaxation of the rules for determining the fee for early repayment.

Currently, the bank may charge you a fee in the amount of the costs they intentionally incur with this early repayment. After various illumination conditions it is already clear today that these are only administrative costs directly related to early repayment (eg costs for the salary of the employee who processes the process, telephone and postal costs, cadastre fees, etc.). As a result, banks now charge more or less a fee for early repayment of the mortgage, and if they do, then only in the order of a hundred crowns.

As banks have long pointed out, administrative costs are not the only costs they face. If customers pay off their mortgage early even before the settlement period ends, we incur two types of charges. Administrative and mortgage financing costs equal to the price of money in the financial market that we use to finance that mortgage. Although we as a bank carry both types of costs, at the moment we only charge customer administration costs, he told us Filip Hrubýspokesman for Česká spořitelna.

Early repayment fee from September

From September, banks will be able to charge, in addition to administrative costs, which reach up to a maximum of CZK 1,000, the difference between the original agreed rate and the current rate on the financial market for early repayment of housing loan. The fee may arrive 0.25% of the part of the loan repaid in advance for each year (even started) until the end of the settlement, but a maximum of 1% prepaid parts.

In this situation, the client’s tax burden will increase significantly. For example, for a prepaid amount of CZK 3 million, the fee can now rise to CZK 30,000. CZK.

Most banks will increase the fee, but there are exceptions

Although banks have in the past changed their fees to interpret the law, most of them have openly admitted that if the law allows it in the future, they will increase the fee as money – compensation for early repayment costs. The current statements of the banks only confirm this.

Česká spořitelna, ČSOB, Komerční banka, mBank, Moneta Money Bank, Oberbank, Partners Banka (planning to launch mortgages in November), Raiffeisenbank and UniCredit Bank expect the fee for repayment​​​​ set early as the change to the law from September allows.

The higher fee for early repayment will apply to new mortgages approved from 1 September 2024 onwards. For existing mortgages, the new rules will apply from the moment they go through repayment ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​frontier.

On the other hand, Air Bank is not going to increase the fee: Early repayment of the mortgage from their own money and, for example, from the sale of real estate, it is free for the client of Air Bank, and nothing has changed since September 1st. Regarding the penalty for moving (refinancing) the mortgage to another place during the settlement, it is true that we do not impose this penalty on users from the first day of September and we are not planning for it in the future. he appeared Martin RichterAir Bank’s head of mortgage services, says that less than a hundred mortgages were transferred in this way last year, which represented 0.8% of all mortgages in the bank’s portfolio.

Creditas is the other bank that will not change anything. We have a wonderful installment and repayment of the loan outside the interest rate change period (reform) for free, and in this respect nothing will change from September. the speaker confirmed Lucie Bruncian. At this point, let us just remind you that the bank no longer offers new mortgage loans.

Why aren’t mortgage rates falling as fast as CNB rates?

Although the peak of mortgage interest rates is over, they are falling relatively slowly. Certainly slower than clients would like, who often compare the development of mortgage rates with those of the Czech National Bank (ČNB), which has been lowering its rates very quickly recently.

However, the banks say that it is not possible to compare things in this simple way, because money borrowed for a short period does not have the same price as money borrowed for a longer period, and although the CNB is short-term rates also affect the price of long-term funds, there is no direct correlation.

Each bank has its own valuation methods to determine the price of its facilities. The CNB’s base interest rates represent short-term rates – eg the CNB 2T repo rate shows the bank’s return on money they deposit at the CNB for two weeks. However, for banks, mortgage loans represent a long-term investment, and the return is measured by the banks against the return from other long-term assets, e.g. pointed out Martin Richter of Air Bank.

She also explained that the development of longer rates is more important for mortgages Monika HorínkovaČSOB spokesperson: Longer rates are financed on the market, either with mortgage bonds or so-called swaps (one-year, three-year, five-year, seven-year), and are influenced by many factors.

The effectiveness of the so-called interest rate swaps depends on the length of the mortgage position, so, for example, rates for a 3-year arrangement are linked to 3-year market rates.

Usually, short money is cheaper than long money. But in recent years, the price of money in the market has been the opposite, and short stores have been more expensive than long ones. In our mortgage market, the situation has been so great that for two to two and a half years we were on the so-called inverse curve, ie in a situation where shorter rates were higher than no longer, pointed out Hořínková.

according to Tereza Kaiseršotova from Raiffeisenbank, the unusual situation is now going straight and the price of short money is falling. But the price of long money remains as the curve turns back to the normal shape where short money is cheaper. In other words, the CNB is reducing, but it has no effect on the price of 3-year or 5-year arrangements, as the reduction in CNB rates did not take effect until those times. and at the same time he reminded that the CNB does not decide the level of the resulting market rates, but that supply and demand and the market now just keep long rates at the same level even after the central bank lowered rates. If the client had a mortgage with interest at a floating rate linked, for example, to 1M PRIBOR, which would be updated every month, the reduction in CNB rates would be fully recorded on his interest rate. But he would have to take out a mortgage with a rate of over 7.5% in December 2023 (that’s the rate a floating rate mortgage costs) instead of a rate of around 5.5% – 6% with a 3-5 year fix.

The remainder of Libormortgage expert at Broker Trust, says the slower decline in mortgage rates may be related to the current prepayment penalty rules: In the case of mortgages with a longer settlement, the interest is generally still above the 5% threshold, which is due to the higher funding cost, in which the banks include the risk of the borrower leaving client..

according to Achřej ŠuchmanKomerční banka Group mortgage manager, but the costs of early mortgage repayments must still be reflected in mortgage interest rates: In some cases, the maximum amount of intentionally spent costs of 1% may not cover the costs of the banks of funding sources.

The lowest rates are currently being offered by Moneta Money Bank, which is trying to attract customers to their own mortgages at the expense of their own margin. Its lowest rate, including discounts, starts at 3.99% per annum for a five-year fix, but only for loans up to 55% of the property’s mortgage value. Other levels are higher. However, Česká spořitelna has also reduced interest rates on mortgages, which have the lowest interest rate, including discounts, starting at 5.09% for 3- to 5-year fixed rates. In addition, ČSOB, which offers a rate for a one-year settlement from 4.99% per annum if the conditions are met