According to Fincentrum Hypoindex, the average mortgage rate rose by 29 basis points to 2.99% per year in December. The average rate thus remained just below the 3% mark at the end of the year.
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The rate on refinanced loans was about one percentage point lower, the competitive indicator CBA Hypomonitor said last week. On average, it stood at 2.96 percent in December. It includes loans provided not only by banks but also by building societies.
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“This is the highest month-on-month increase in the history of Fincentrum Hypoindex. And given the ever-increasing supply rates, it is clear that they will continue to rise. We can expect this trend to apply for the whole of this year, “said Jiří Sýkora, mortgage analyst at Fincentrum & Swiss Life Select.
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The year 2021 was a record in the volume of provided mortgage loans. According to CBA Hypomonitor, last year banks and building societies provided mortgages in the total amount of 541.3 billion crowns, a third of which were loans refinanced from another financial house.
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The fall will come this year. Interest rates are still rising and mortgage lending will tighten from April. “This year, however, the volumes will fall by at least a fifth,” says Jiří Sýkora, mortgage analyst at Fincentrum & Swiss Life Select. Moneta bank boss Tomáš Spurný goes even further. As he stated for SZ Business on the show Agenda, the mortgage market will fall by half this year.
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In addition, he thinks a new wave of refinancing is coming. For clients whose fixations end this year, the installments will jump by at least thousands of crowns.
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“If people hit the ceiling of their ability to repay the mortgage, they will try harder to find an institution that will help them manage the mortgage. There will be not only refinancing, but also a change in the maturity of mortgages. If you have ten years to maturity today and you are able to take out a mortgage for 20 years, it is under consideration whether to extend it again so that the family budget is able to absorb the increase in price, “said Tomáš Spurný.
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According to Sýkora, last year mortgages were the best in history for several reasons: enormous demand for owner-occupied housing and the constantly rising price of real estate.
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“Last year, however, was also completely unique in terms of interest rates. We started at 1.94% in January and ended in December at an average interest rate of 2.99%. This is a difference of over one percentage point and can also be considered a record in the mortgage market, “said an analyst at Fincentrum & Swiss Life Select.
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According to Fincentrum Hypoindex, the average mortgage amount reached CZK 3.2 million in December, while the CBA Hypomonitor states a value of CZK 3.12 million. For the whole of last year, the average mortgage rose by a quarter of a million.
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According to Vojtěch Prokop from the Zaloto mortgage market practically the whole of last year was marked by an extension of the average length of fixation, but in the last quarter the trend reversed. “People are now choosing a shorter fixation lasting 3 to 5 years, because the current trend of raising rates will continue for some time to come,” said Prokop.
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How Hypoindex and Hypomonitor differ
- Pointer Hypoindex Fincentrum monitors the average mortgage rate since January 2003. Data is provided by Air Bank, Česká spořitelna, ČSOB, Equa bank, Moneta Money Bank, Hypoteční banka, Komerční banka, Raiffeisenbank, Sberbank CZ, UniCredit Bank, formerly Wüstenrot hypoteční banka (now part of Moneta).
- Statistics called Hypomonitor issued by the Czech Banking Association (CBA) since August 2021. In addition to the above banks, data are also provided by Banka Creditas, Fio banka, mBank and Oberbank and all building societies (ČSOB Stavební spořitelna, Modrá pyramida, Moneta stavební spořitelna, Raiffeisen stavební spořitelna and Stavební spořitelna České savings banks).
- CBA Hypomonitor, unlike Fincentrum Hypoindex, distinguishes newly negotiated mortgages into completely new loans and refinanced mortgages.
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At the end of December, the Czech National Bank (CNB) raised the key interest rate by one percentage point to 3.75%. In addition, the central bank expects its further growth this year as well, but the growth rate should slow down.
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“Rates on the interbank market are rising, as are mortgage lending rates. Mortgage offer rates are growing faster than the average mortgage interest rate according to the Fincentrum Hypoindex. Delays are caused by trades concluded at an even lower interest rate. However, the growth of mortgage rates is gaining momentum, “said Jiří Sýkora.
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Mortgage offer rates are currently well above 4% per year, and we will probably not see a decline this year. The last time, on Monday, ČSOB and Air Bank became more expensive. The former now offers the most commonly used mortgage with a five-year fixation of 4.79% per annum.
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How mortgage rates are changing this year
- January 3: Sberbank raises rates by 0.4 percentage points
- January 4: Raiffeisenbank raises rates by 0.3 to 0.8 percentage points
- January 10: Komerční banka raised rates by 0.4 to 0.8 percentage points
- January 11: Moneta cuts selected rates by 0.1 to 0.15 percentage points
- January 12: UniCredit Bank raises rates by 0.2 percentage points
- January 17: ČSOB raises rates by 0.6 to 1 percentage point, Air Bank by 0.4 percentage point
- Source: Banks, Cheetah Finance
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“It is likely that the growth of the average interest rate will continue to accelerate and it is possible that it will soon look beyond 4% per year. The average interest rate for this level was last reached in August 2011. The highest interest rate was reached according to the Fincentrum Hypoindex in August 2008, when it climbed to 5.82% per year, ”concludes Jiří Sýkora.
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