An ordinary mortgage will increase in price by thousands of crowns. Bankers are negotiating rates

Analysts expect a further increase in mortgage rates later this year. “Rates could rise to 3.5 percent, an attack of four percent is not excluded,” said Veronika Hegrová from the online comparator hyponamiru.cz. “Everything will depend mainly on the steps of the Czech National Bank,” she confirmed. In addition, mortgage banks are experiencing an extremely successful year this year, so they have no reason to keep their rates low.

Economists point out that many, especially younger clients, have previously obtained a mortgage at a very low interest rate at the limit of their financial means. However, if its rate increases sharply, they could not only lose the purchased property, but in addition it can bring them existential problems. “For example, for a family with a three-million mortgage agreed for 25 years, the installment will increase from the current CZK 13,348 to CZK 17,537 if the rate increases to five percent,” said Jiří Sýkora from Fincentrum & Swiss Life Select. The monthly payment would therefore increase by more than four thousand.

In addition, many households will find their normal operation significantly more expensive, mainly due to the current record rise in energy prices. Exceptions are not cases where only gas deposits in a two-generation house will increase monthly from the current six thousand to 22 thousand crowns. “This, together with the increasing mortgage payment and the rising prices of common commodities thanks to inflation, can really send several thousand people on the street,” Sýkora fears.

Resolve it in time

Debt counseling warns that such vulnerable bank clients often do not admit to danger and are no longer willing to react to it in time. “Few people deal with these things in advance. People usually decide to do so only when the problems catch up with them, “said Barbora Čechová, director of the crisis center THEiA in České Budějovice. Counseling centers could advise these people at risk of insolvency before this situation occurs. In addition, their financial advice is free. “Unfortunately, we do not have such clients, or these are just exceptions,” Čechová lamented.

If other people are unable to repay their obligations, the advisers recommend that they contact the mortgage provider in good time. When refinancing a mortgage, according to Čechová, it is necessary to look not only at its new rate, but it is also appropriate to remodel the entire mortgage. “If possible, we recommend extending the maturity period,” said Čechová. Although the loan will become more expensive for clients in general, if the monthly payment is reduced, they would be able to cope more easily with the higher financial burden of the household, which could thus function relatively normally.

However, not every client will have this option. “Many people have immediately committed to the longest possible repayment period of a mortgage loan, which the law allows,” said David Šmejkal, director of the Prague Financial Distress Counseling Center. According to his estimate, however, this risk is only threatened by a minimum of mortgage bank clients. “Before they give them credit, they thoroughly check their ability to repay,” he said. “The so-called blood, ie with the fact that they have no free funds left, only a minimal part of the clients goes, I estimate it to be a maximum of units of percent,” added Šmejkal.

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