Mortgages have stopped getting more expensive

Mortgage interest rates are starting to stagnate after a long time. Compared to the previous month, the average offer rate increased by only 0.04 percentage points in August to 6.28 percent, according to Fincentrum Hypoindex.

As expected, the Czech National Bank’s (ČNB) Bank Board kept the base rate at seven percent at its last meeting last week.

This has been reflected in the current level of mortgage rates, which have not continued the enormous growth of recent months. The average offer rate, therefore, rose only slightly, by four basis points.

The monthly repayment is roughly the same

The monthly installment of an 80 percent mortgage for CZK 3.5 million with a three-year interest rate fixation, a 25-year maturity, and an average offer rate of 6.28 percent is CZK 23,151 in August.

Compared to the previous month, it increased by only CZK 77.

Mortgages above 80 percent LTV cheaper

According to Fincentrum Hypoindex data, interest rates on mortgages with an estimated property value (LTV) above 80 percent have fallen slightly.

Mortgages with a one-year fixation made interest rates cheaper by one basis point to 6.21 percent per annum, while those with three- and 10-year fixations fell by two basis points to 6.67 percent and 6.30 percent per annum, respectively.

Mortgages with a five-year rate fixation became the cheapest, by five basis points to 6.23 percent per annum.

On the other hand, mortgages up to 80 percent LTV became more expensive. Rates for three-year fixings rose by five basis points to 6.46 percent per annum.

Mortgages with one-year and ten-year terms rose by an average of four basis points to 6.57 percent and 6.08 percent per annum, respectively. The average rate for mortgages fixed for five years is one basis point higher, at 6.01 percent per annum.

What’s next?

According to analyst Sýkora, the stagnation of rates may not last too long, as even the opponent of the previous base rate hike, ČNB Governor Aleš Michl, admitted to a possible further increase.

Mortgage rates should continue to fluctuate between the current six and eight percent per annum until the end of this year.