Mortgage Market Freezes asโ Rates Stabilize, Refinancing Takes Center Stage
Prague, Czech republic – November 30, 2023 – Teh Czech mortgage โคmarket has entered a periodโ of stagnation,โ with interest rates holding โฃsteady in November, according to analysisโค from Swiss Life Select. While rates are down from theirโข peak last year, theyโ remain a significant barrier forโ many prospective homebuyers, and โa wave of refinancing is now dominating the market.
the average mortgage rate remained atโ 4.91% in November, unchanged from the previous month. This stabilization – or stagnation, depending on viewpointโข – follows a โคyear of declining rates, with the Swiss Life โHypoindex showing an overall drop of roughly โa third of a percentage point throughout 2023.
“November brought stabilization toโข the mortgage market – or stagnation, depending on the โคpoint of view,” explains Jiลรญ Sรฝkora, a mortgage analyst at Swiss Life Select.
Fixation Breakdown: What Rates look Like Now
Currently, three-year fixed-rate mortgages offer the most favorable terms,โ averaging just above 4.5%. heres a closerโค look โคatโ current rates:
* 3-Year Fixation: Slightly above 4.5%
* 5-Year Fixation (up to 80% LTV): Just underโข 4.8%
* 10-Year โคFixation: Just below 5.4%
* 1-Year Fixation: Around 4.9%
While the differences between fixation lengths aren’tโ substantial, they reflect aโค cautious approach from banks in setting prices.
Market Volume Lags Behind Previous Years
Despite the rate decline, theโค mortgage market hasn’t experienced โa significant rebound. While new โขhousing loan volumes โare up year-on-year, they still haven’t reached the โrecordโข highs seen in 2020. This is attributed to a combination of factors: persistently highโข real estate prices, cautious consumerโค sentiment regarding long-term financial commitments, and broader economic uncertainty.
“The current rates of around five percent are indeed lower than last year, โฃbut for manyโ people interested inโ their own housing, they remain above the threshold โคof financial availability,” Sรฝkora notes.
Refinancing Surge: โA Looming Financial โขReset for Many
the focus has now shifted from new mortgages to refinancing.Thousands of homeowners who secured mortgagesโ with rates below 2%โ during previous periods areโ now facing fixation ends and aโ dramatic increaseโ in their monthly payments.Those with fixations expiring next yearโข are also proactively exploring their options.
Swiss Life data illustrates โคthe stark reality: the monthly installment on a three-million-crown mortgage with a 30-year term has jumped from 10,900 to 15,900 crowns.
Banks are actively competing for theseโ clients, offering individual rates, fee discounts, and guarantees to retain existing customers and โattract those looking to switch lenders.
Looking Ahead: The Czech โmortgageโค market remains in โa delicate state, balancing the need for affordability โฃwith economic โrealities. The coming monthsโ will likely be defined by the refinancingโ wave and theโ strategies banks employ to navigate this challenging landscape.
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