The average mortgage rate in September has returned to below the five percent threshold after a slight summer increase in housing loans. However, the decrease was minimal. According to the Swiss Life Hypoindex, rates fell to 4.99 percent in September.
“Banks are reluctant to lower interest rates. Interest rate swaps (the price of money on the interbank market) have been climbing since the end of August and are higher than they were a year ago. Another reason is the significant unrest and chaos in global markets and on the world political scene. Last but not least, mortgage demand remains high, so banks have little incentive to push rates downward,” explained Lucie Drásalová, a mortgage analyst at Sirius Finance.
The Czech National Bank is expected to continue keeping interest rates in check, with the base rate standing at 3.5 percent and no significant downward movement anticipated. Meanwhile, Swiss Life Select analysts warn that banks are protecting their margins, and no major breakthrough in mortgage prices is on the horizon.
For potential borrowers, experts recommend thoroughly comparing offers from multiple banks. “Three or five-year fixed rates, which combine stability with flexibility, are increasingly becoming the standard. In contrast, mortgages with very short or long fixed periods usually remain less advantageous,” noted Jiří Sýkora, an analyst at Swiss Life Select.
Clients who secured mortgages during the COVID period with interest rates around two percent are now facing substantially higher payments when their fixed periods end. For instance, someone who took out a five-million crown loan for 30 years with a five-year fixed rate was paying approximately 18,500 crowns monthly. If they insisted on a five-year fixed rate today, with rates starting at 4.59 percent, their payment would increase to about 25,600 crowns—an increase of more than 7,100 crowns.