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Mortgages become the most expensive in history. The monthly loan repayment can increase by thousands


The average mortgage rate rose in December the fastest since 2003. According to the Fincentrum Hypoindex, it ended just below three percent. Rates exceeding the four percent mark can already be found in the offers of some banks. Financing experts thus estimate that interest in housing loans will fall sharply this year.

The average mortgage rate rose 29 basis points to 2.99 percent in December. “This is the highest month-on-month increase in the interest rate in the history of the hypoindex. And given the ever-increasing supply rates, it is clear that they will continue to rise. of Fincentrum & Swiss Life Select.

Normally, however, rates of over four percent can be found on the market. Banks have become more expensive in recent months. For example, Airbank and ČSOB have now announced interest rate increases.

“From January 17, 2022, we will increase interest rates on mortgages by 0.4 percentage points. For new mortgages, the bank will offer clients an annual interest rate of 4.14 percent, including mortgages on the ability to repay the mortgage. For mortgages transferred from another bank, the annual interest rate will be new to 3.94 percent, “Airbank said in a press release.

ČSOB rose by 0.6 percent and the rate thus ranges from 4.49 to 4.79 percent, depending on the length of the fixation. “The new rates are a response to the CNB’s sharp move on 22 December 2021, which seeks to prevent a further rise in inflation,” explained Jiří Feix of Hypoteční banka and ČSOB Stavební spořitelna.

At the end of December, the Czech National Bank (CNB) raised the key interest rate by one percentage point to 3.75 percent. In addition, the central bank expects its further growth this year as well, but the growth rate should slow down.

“It is likely that the growth of the average interest rate on mortgages will continue to accelerate. The average rate in the hypoindex last reached four percent in August 2011. It reached its highest level in August 2008, when it climbed to 5.82 percent,” says Jiří Titmouse.

Higher monthly payments by thousands

As the hypomonitor of the Czech Banking Association points out, who also monitors developments on the mortgage market, with the expected rise in interest rates, the monthly payment for new or refixed loans also increases.

“If the average mortgage rate reaches the limit of five percent this year, it will mean an increase in the monthly payment of three and a half to four thousand crowns per month for the average size of the mortgage. In 2016 and 2017, mortgage rates at five percent would mean an increase in the monthly payment for the average mortgage by five to six thousand crowns per month, “the hypomonitor points out.

Monthly mortgage payment at the rate Photo: CBA

In December, banks provided 10,745 mortgages in the total amount of CZK 34.532 billion. Compared to November, the number of provided mortgages decreased by 624 and the volume by 2.672 billion crowns.

Last year was quite extraordinary on the mortgage market. Banks have arranged loans worth almost 430 billion crowns. Until now, it held the lead in 2020, when banks provided mortgages worth 254 billion crowns. The mortgage market thus grew by almost 70 percent year-on-year.

“The year 2021 was a record year in the volume of provided mortgage loans and it can be expected that it will not be surpassed immediately. Because the mortgage market will cool down this year, by at least 20 percent,” Jiří Sýkora estimates.

The average amount of a mortgage in December fell by almost 60,000 to 3,213,738 crowns. Over the last year, the average mortgage has increased by 247,588 crowns, despite several declines. “The growth of the average mortgage is slowing down, but real estate prices are still rising, although not as fast as last year,” says the analyst.

The executive director of the Central Group development company, Michaela Tomášková, pointed out that the path to mortgages will soon become even more complicated for many people. The new stricter CNB rules will come into force on 1 April.

“While now it has been enough to save 500,000 from your own resources to buy a five million apartment, you will need at least a million from April 2022. In addition, it will only be possible to take out a loan up to 8.5 times your net annual income. According to the statistical office, it is 45 thousand crowns (36 thousand net), so it will reach a maximum of 3.7 million crowns on the mortgage, “said Tomášková, adding that the total repayment of all loans in this model case will not exceed 45% of net monthly income.

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