“Compared to July, the number and volume decreased by about five percent and compared to June by a quarter. Nevertheless, it is the best August result in the history of Hypoindex. So far, there is no significant cooling of the mortgage market. Interest in mortgages has usually declined in recent years during the summer months, “said Jiří Sýkora, mortgage analyst at Fincentrum & Swiss Life Select.
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According to him, with rising rates, interest in mortgages will decline. “We expect a decline in the volume of mortgages provided, precisely due to rising real estate prices and interest rates. However, despite the suspension of interest in new mortgages, it is clear that this year will be historically the most successful year on the mortgage market, “added Sýkora.
In the first eight months of the year, banks arranged mortgages for almost CZK 293 billion. By the end of the year, the volume of mortgages provided could approach the limit of 400 billion crowns.
“If the mortgage market continues to develop at this rate, it is likely that at the end of this year, the volume of brokered mortgage loans will exceed CZK 400 billion. Furthermore, it is also almost certain that average interest rates will look over three percent, “Vojtěch Duffek, 4fin’s regional director, told Radiožurnál.
Growth does not end
But the rise in rates is far from over. “Currently, most banks offer rates for mortgages up to 80 percent of the value of the collateral with a rate exceeding 2.5 percent, for longer fixations. It cannot be ruled out that at the end of the year the average rate will attack the 3% threshold, which would happen for the first time since 2013. This will significantly reduce the availability of mortgages and reduce interest in refinancing, “said Milan Voldřich, Raiffeisenbank’s head of mortgage loans.
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“Mortgage rates continued to rise in August. Even according to the current offer interest rates of individual banks, it is clear that the current value is definitely not the one at which growth will stop. It can therefore be assumed that in the second half of the year we will get closer and closer to the three percent mark, “says Sýkora.
The rise in mortgage rates since the spring is related to developments in the interbank interest rate market with longer maturities. “The five-year interest rate swap, which allows a fixed interest rate to be fixed and which represents a reference value for the development of rates, rose to the highest level in the last year of 2.38 percent. Due to rising inflation and the expected increase in central bank rates, market resources are gradually growing, which will mean a further increase in mortgage rates, “said Miroslav Zámečník, Advisor to the Czech Banking Association.
During August, mortgages from Fio banka, Moneta Money Bank and Sberbank became more expensive, and in the first half of September, even the largest mortgage banks decided to raise interest rates. Česká spořitelna, the ČSOB Group and Komerční banka raised mortgage loans more expensive by 0.2 percentage points. From September 20, rates will also increase in Air Bank, by 0.25 percentage points.
“Currently, most banks offer rates for mortgages up to 80 percent of the value of the collateral with a rate exceeding 2.5 percent for longer fixations,” added Raiffeisenbank’s mortgage director Milan Voldřich. According to him, it cannot be ruled out that by the end of the year the average rate will attack the 3% threshold, which would happen for the first time since 2013. This will significantly reduce the availability of mortgages and also significantly reduce interest in refinancing, Sýkora added.
Patron analyst Daniel Horňák pointed out that the real average rate is already higher today. The deals signed in August were negotiated mostly in July, because the banks did not manage to process a large number of deals. “Rates are rising from week to week, today they are approaching three percent of five-year fixations and will continue to rise in connection with the announced increase in CNB rates,” he said.
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