The average mortgage rate at the beginning of April rose slightly to 6.30 percent from 6.27 percent in March. This follows from the data of the Fincentra Hypoindex, which is processed on the basis of data on the fifth working day of each month. The methodology reflects the current average mortgage loan offer rate for 80 percent of the property’s value.
“The reason for the increase in the offer rates is the end of promotional discounts at some banks. However, the majority of the banking market continues to copy the behavior of the Czech National Bank and keeps its rates at the same value. Everything indicates that this trend will really last, if not the whole of this year, then certainly until its last quarter,” said Fincentrum & Swiss Life Select mortgage analyst Jiří Sýkora.
Banks react to the development of the price of resources with a delay, so there was a slight increase in prices, even though their price fell quite sharply during March, the regional director of the consulting company 4fin, Karel Peter, told ČTK. However, according to him, it is not a change of trend, because the central bank maintains the status quo on the basic interest rate.
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 6.3 percent increased by 73 crowns to 23,205 crowns in April. However, clients pay almost 3,000 crowns more year-on-year, because last April the average offer rate was 4.88 percent.
In the past month, all average offer rates for mortgages fixed from one year to ten years have increased, both for mortgages up to 80 percent of the property’s mortgage value (LTV) and for mortgages with an LTV above 80 percent.
The rates for ten-year fixed mortgages with an LTV above 80 percent rose the most, by 12 percentage points to 6.38 percent. Mortgages with an LTV of up to 80 percent fixed for ten years rose by 0.08 percentage points to 6.1 percent. Mortgages fixed for three years with an LTV above 80 percent and with a rate of 6.7 percent also recorded an increase of eight percentage points, making them the most expensive on the market.
Fixed-year mortgage rates rose by just one percentage point. On average, banks offer one-year fixed mortgages with an LTV of up to 80 percent for 6.65 percent and with an LTV above 80 percent for 6.15 percent. The same increase was observed for mortgages up to 80 percent fixed for five years (6.05 percent).
The Czech National Bank left interest rates unchanged at the end of March, in line with expectations. The two-week repo rate thus remains at seven percent, where it reached last June. Base interest rates could remain at a higher level for a longer period of time. According to experts, the same applies to mortgage rates.
Despite the high interest rates, however, the mortgage market is reviving. “The mortgage market is experiencing an expected slight recovery at the beginning of the year. This is mainly due to the end of fixation on older mortgages, but also to the drop in prices of some properties. And also to the fact that clients are slowly getting used to the increased rates,” Sýkora added.
