Czech money, banknotes, crown, house, mortgage, rent, building savings – illustration photo.
Prague – The average mortgage interest rate at the beginning of February was 6.37 percent. It increased slightly from January's 6.34 percent. This follows from the data of the Fincentra Hypoindex, which is processed on the basis of data on the fifth working day of each month. The methodology reflects the current average mortgage loan offer rate for 80 percent of the property's value. Experts expect rates to stagnate in the coming period.
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Offered mortgage rates rose slightly at the beginning of February. “These are rather cosmetic changes and the overall trend of mortgage rate development continues to stagnate. We can continue to expect mortgage interest rates to stagnate, which can only be disrupted by the spring discount promotions of some banks. We definitely cannot expect any more significant growth,” said an analyst at Fincentrum & Swiss Life Select Jiří Sýkor.
The most significant increase was in interest rates on mortgages up to 80 percent of the mortgage value of the property with a one-year fixation. They increased by 0.06 percentage points to 6.76 percent. On the other hand, the biggest decrease was for mortgages above 80 percent of the mortgage value of the property with a one-year fixation. They became cheaper by 0.14 percentage point to 6.26 percent.
Monthly installment of a mortgage loan for 3.5 million crowns agreed up to 80 percent of the estimated price of the property with a three-year fixation, a maturity of 25 years and an average offer rate 6.37 percent in February increased by 70 crowns to 23,342 crowns. Over the past 12 months, the monthly installment has increased by approximately 3,850 crowns.
The CEO of Ekospol Evžen Korec pointed out that mortgages are the most expensive in the last 30 years. According to him, they cannot be expected to become cheaper in the near future. “Their amount depends on the basic interest rates determined by the Czech National Bank, which has been holding them at the same level since last summer, and nothing is likely to change in the coming months. Expensive mortgages will continue to have a negative impact on the real estate market, and own housing will remain unaffordable for many families and individuals. This year, practically only those who have their own money and want to protect it from record inflation will buy new apartments this year,” Korec told ČTK.
While mortgage interest rates are stagnant, the prices of some real estate fallen. Sýkora pointed out, however, that the decline was not widespread. “It only concerns certain properties, for example older apartments or more energy-intensive houses. And that's only in some locations. Therefore, if we are talking about the average price of real estate, these price drops are not dramatic. Therefore, we can only expect a slight decrease in the average price of real estate in the Czech Republic market,” he said.
For the coming months, Sýkora expects mortgage interest rates to stagnate, until the Czech National Bank (ČNB) starts reducing the base interest rate. “This probably cannot be expected before the end of this year. With optimistic forecasts, the mortgage interest rate could start to fall at the end of this year, and with more pessimistic forecasts, we could wait for the decline until the spring of 2024. However, it will be a decline in the order of low tenths of a percent ,” concluded Sýkora.
