The long-awaited impulse, which could expand the mortgage market, did not materialize. The Czech National Bank (NB) again postponed the rate cut at the November meeting.
The market was expecting a small change, so there was a little disappointment in this regard. NB, remember this first symbolic step towards the dream of annual rates for better times. Maybe in December, maybe at the end of the year. The situation on the mortgage market is therefore stagnant, to David Eim, deputy chairman of the board of the company Gepard Finance, with the following remark: “Who is good, who is good.”
Ji Skora, mortgage analyst at Swiss Life Select, shares the same view. The decrease of the Swiss Life Hypoindex by three basis points, to the current value of 6.01%, is a rather cosmetic change. Among other things, it stands for a very short-term offer of the action of one of the banks that make up the Swiss Life Hypoindex. The general condition of the bank also reflects the behavior of the NB, which at its November meeting again left rates at their current values, the analyst noted.
Since the beginning of the year, the installment has become cheaper by 700 crowns
The monthly payment of a mortgage loan for 3.5 million crowns agreed up to 80% of the estimated price of the real estate with a maturity of 25 years and an average offer rate of 6.01% pa decreased by 68 crowns to 22,582 crowns due to the latest index change. Since the beginning of the year, these are discounted installments of 700 crowns.
The most significant decrease was recorded by our repayment models in March, when the average offer mortgage rate fell by a tenth and the repayment became cheaper to 23,131 crowns. However, the mortgage payment fell below the threshold of 23 thousand crowns and in August, to Ji Skora.
The declared annual rate is still around 6% pa. The annual rates after product discounts and individually negotiated rates are about a tenth of a percentage point lower, let’s say somewhere around 5.5% pa, but in some cases it can be reached. But that’s bad in concrete circumstances, comments David Eim.
Fixation for those years makes it cheaper, fixation for a year makes you healthy
The most significant decrease in annual rates was recorded by mortgages fixed for those years, by an average of 0.13 percentage points. mortgage rates up to 80 percent of the real estate value (LTV) fell to 5.91% pa; for mortgages for young people under the age of 36 (LTV above 80%), it is 6.26 percent.
Mortgages fixed for five and ten years also went down slightly. The rates of child fixations fell to 5.81% pa for mortgages up to 80% LTV and to 6.15% pa for mortgages for young people.
Against the current, mortgages fixed for one year were issued. On average, they went up by those basis points. Banks offer young people at 6.04% pa, other lenders at 6.46% pa One-year mortgage fixations up to 80% LTV are also the most expensive on the market, while five-year fixations are the cheapest.
When will the mortgage market receive an impulse from NB?
The NB will hold the last meeting on annual rates this summer at its meeting on December 21. However, it is not entirely certain whether the dream of this rate will actually happen.
NB stated that there is a high probability of a dream meeting at the fifth, i.e., December meeting. In this way, he points out that this fall of the dream will be, at least from the beginning, very gradual. It will then be up to the banks whether they will translate the falling dream into mortgage rates immediately as such an external debt to clients, or if they will repent and wait for the start of the mortgage market at the beginning of 2024, noted Ji Skora.
If the NB does approach the target base rate in December, it will only be a drop of a quarter of a percentage point, according to estimates. The base rate could thus drop to 6.75%.
Period of high rates no later than
If the banks are not able to find the real mortgage market, a change in the base rate by a quarter of a percentage point is not a big change. Most of the banks can also determine the expected drop in mortgage rates. On the other hand, even the impulse from the National Bank will be a good start for the mortgage market, similar to high interest rates.
According to the hymns, it seems that somewhere in the distance there is lightning for better times, but we do not see the dog symbolic hill formed by tusks with rates pronounced NB, the lightning for better times. Don’t hesitate, don’t wait patiently towards the horizon and wait for the first lightning in the form of repo rate dreams to light up the financial sky, concluded David Eim.
