A Slight Dip: New Mortgage Payments Decrease Symbolically by 68 Crowns

The trend of declining mortgage rates continues, albeit very weakly. According to the Swiss Life Hypoindex, the average interest rate has decreased by another four-hundredths of a percentage point in the last month, standing at 6.01%. The monthly loan payment for 3.5 million crowns, arranged for up to 80% of the property price with a maturity of 25 years at this rate, has dropped by 68 crowns to 22,582 crowns.

“The decrease is rather cosmetic; mortgage rates are largely stagnant. This is partly due to a short-term offer from one of the banks,” says Swiss Life analyst Jiří Sýkora.

The most significant decrease was recorded by mortgages fixed for three years, averaging 0.13 percentage points. The interest rates of such a mortgage for 80% of the property value dropped to 5.91%, and for young people’s mortgages to 6.26%.

Three-year fixes have thus joined five and ten-year ones, which banks have offered under the six percent threshold since July.

However, going against the trend are mortgages fixed for one year, which, on average, have become more expensive by three-hundredths of a percentage point. Banks offer them to young people for an interest rate of 6.04% and others for 6.46%. They remain the most expensive on the market, while the cheapest are five-year fixes.

Interest in mortgages now awaits whether the Czech National Bank will begin to lower its base interest rate, from which the prices of commercial bank products are derived. “The CNB has stated that it will most likely reach for a decrease in December,” Sýkora from Swiss Life recalls, adding that central bankers plan to lower the interest rate slowly. “It will be up to the banks whether they reflect a possible decrease in mortgage rates immediately as a Christmas gift to clients or wait until the start of the mortgage market in early 2024,” added the expert.