Mortgage Rates are Falling: A Financial Relief for Homeowners

The first banks have reacted to the central bank’s December decision and have reduced mortgage interest rates to around five percent. The remaining providers are also prepared to reduce mortgages with the expected further reduction by the Czech National Bank. Both new and re-fixed mortgage loan repayments should decrease by hundreds to thousands of crowns compared to last year.

Moneta Money Bank, Air Bank, and Fio Bank offer less than five percent mortgages. “Rates have been falling since the end of last year, and this trend is assumed to continue. By the end of this year, rates could be between four and 4.5 percent,” predicts Swiss Life Select analyst Jiří Sýkora.

This reduction was prompted by the fact that the Czech National Bank (CNB) lowered the base interest rate, from which the interest on their commercial products is derived, by a quarter of a percentage point to 6.75 percent in December. The bank board will vote on rates again next Thursday. Vice Governor Eva Zamrazilová has said that she hopes the CNB will be able to loosen monetary policy at least a quarter of a percentage point at each of its next monetary meetings.

According to experts, this could further force even the largest banks to reduce rates. “We are watching the market, and in the event of another movement in rates at the CNB or competition, it is not ruled out that we will react. Although we do not expect that this year’s mortgage rates in the market generally will get too much below the five percent mark,” Czech Savings Bank spokesman Filip Hrubý told Novinky.

In conclusion, around one million smaller mortgages may not always pay off due to one-off costs. “It is always necessary to calculate very individually. Anyway, if clients’ fixation ends and they get an unreasonably high new offer, the first step should be to go to the home bank to see whether it is possible to reduce the offer. Most often, it is successful,” she claims.