Mortgage prices have accelerated, the average rate is already 5.33 percent

Since the beginning of this year, the average bid rate is 1.19 percentage points higher. All those whose fixations end this year should refinance as soon as possible, experts advise. According to them, the rise in mortgage prices is definitely not over yet.

It is expected that the board of the Czech National Bank will raise interest rates again at today’s meeting. It is expected to raise the base rate by 0.5 percentage point to 5.5 percent.

“According to economists, a further increase in the base rate could take place in June, by a quarter of a percentage point. The growth of mortgage rates is not over yet. However, mortgage payments are already becoming more expensive by thousands of crowns, “said Jiří Sýkora, an analyst at Fincentrum & Swiss Life Select.

For people with an expiring five-year mortgage fixation of CZK 3.5 million, the monthly payment will increase by more than CZK 7,000

Jiří Sýkora, analyst

At the May average offer rate of 5.33 percent, according to him, the monthly payment of a 3.5 million mortgage is up to 80 percent of the estimated property price and a three-year fixation of CZK 21,136.

“In a month-on-month comparison, when the average offer rate was 4.88 percent in April, the monthly payment increased by more than 900 crowns, compared to January by almost 2,400 crowns and since last June by almost 5,500 crowns,” he added.

Average mortgage rates
(up to 80% of the estimated property price)

  • annual fixation – 5.5 percent per year
  • three-year fixation – 5.52 percent per year
  • fixation for five years – 5.14 percent per year
  • ten-year fixation – 5.15 percent per year
Source: Fincentrum Hypoindex

At the same time, real incomes of Czech households are falling sharply due to rising inflation, paying more for energy, food and other items than last year. According to estimates, year-on-year growth in consumer prices has already exceeded 13 percent. In addition, according to analysts, the economy will slow significantly this year, which may result in rising unemployment. Many households should then have to repay their mortgage problems.

Almost a million of the roughly 4.5 million households in the Czech Republic have a mortgage, ie more than one in five. There are over 1.1 million housing loans in the Czech Republic, including loans from building savings. According to the Czech National Bank, their volume rose by 0.7 percent month on month to 1.63 trillion crowns in March. They represent more than three quarters of household debts to banks, in total they owe them over two trillion crowns.

The end of the fixation will raise the installments by thousands

“The imaginary scissors between the current rate and the rate that mortgage owners had fixed, for example, five years ago, are widening. And it is these clients, whose five-year fixation ends, who have to find more and more funds in their family budgets for an increased installment. Specifically, for clients with an expiring five-year fixation for a mortgage of 3.5 million crowns agreed for 25 years, this is an increase of more than seven thousand crowns per month, “Sýkora calculated.

He recommends to all those whose fixations end this year and still do not have a new rate agreed for the next period to hurry up. “Mortgage interest rates may climb below six percent this year,” added Sýkora.

“We now recommend solving the new mortgage and refinancing as soon as possible, because we simply have no idea what will happen. The current situation is very difficult to predict, so I would prefer to take higher interest today and negotiate interest rate improvements with the bank in a few years, even during the fixation period, than wait and pray for a better tomorrow, which may not come, “he told Právo. Ondřej Ticháček from the Zaloto mortgage market.

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