Mortgage interest rates are finally falling!

Since the beginning of the year, we have seen interest rates fall, and this trend is expected to strengthen even more through the spring months. The next meeting of the Czech National Bank ("CNB") is already tomorrow, March 20, 2024, and further reductions in basic interest rates are expected. Mortgage banks will most likely respond to this again after a few weeks by lowering mortgage interest rates.

The 3-year fixation is the most popular

The situation on the mortgage market has also changed in recent months from the point of view of the most popular length of fixation. For years, we have been used to the fact that the most popular length of fixation clients choose is 5 years. With higher interest rates, this has changed and approx. 70-80% of all clients prefer a fixed term of 3 years. From our point of view, it is certainly a suitable choice, also with regard to the possibility of changing the conditions even during fixation.

Interest rates start at 4.49%, but...

With a 3-year fixation, count on interest rates in the band most often from 4.49% to 5.79%, depending on the selected bank. The discount for any solvency insurance is not included, so the final interest rate may be 0.10-0.20% lower. However, keep in mind that these are "interest rates from..." and many clients will not reach these. It will be more realistic if you expect an interest rate slightly above the 5% limit, e.g. 5.09% or 5.19%.

Outlook for 2024

In the following months of this year, we expect further reductions in interest rates, and most clients should thus be able to reach interest rates in the range of 4.50-5.00% in the second half of the year. If there were to be a more significant and brisk reduction of interest rates by the CNB, then it is possible that most clients will take rates of 4.00-4.50% in banks. I wish!

In summary, interest rates have been slowly falling since the beginning of the year and will continue in this trend, provided that there are no new unexpected events in the market that would reverse this trend.