“The decline is rather cosmetic, mortgage rates continue to remain more or less stagnant. This is due, among other things, to a short-term offer campaign by one of the banks,” stated Swiss Life analyst Jiří Sýkora.
In the case of newly approved mortgages, this year, compared to last year, the repayment decreased by almost 700 crowns per month.
The most significant decrease in interest rates was recorded by mortgages fixed for three years, by an average of 0.13 percentage points. Interest rates for such a mortgage for 80 percent of the value of the property fell to 5.91 percent, for mortgages for young people to 6.26 percent.
Three-year fixations have thus been added to the five- and ten-year ones, which banks have been offering below the six percent threshold since July.
Long-term fixation is pointless
Against the current, mortgages fixed for one year were issued. On average, they rose by three hundredths of a percentage point. Banks offer them to young people at an interest rate of 6.04 percent and to others at 6.46 percent. They remain the most expensive on the market, while five-year fixations are the cheapest.
Experts from Fingo.cz state in a report for clients that “rates are currently at their peak, and therefore it makes no sense to choose a long-term fixation for, say, seven or ten years. Also, a one-year peg has lost its meaning as the base rate cut is not expected to come so quickly. In addition, the annual fixation is expensive, the rate reaches up to seven percent”.
Those interested in mortgages are now waiting to see if the Czech National Bank will start lowering its base interest rate. The prices of commercial banks’ products depend on it.
“The CNB has indicated that it will most likely cut rates in December,” recalled Sýkora from Swiss Life, adding that the central bankers are planning to lower interest rates very gradually. “It will be up to the banks whether they will reflect any reduction in mortgage rates immediately as a Christmas gift to clients, or wait until the mortgage market starts up in early 2024,” the expert added.