The days of cheap mortgages are over, but don't lose hope
Last week, the The Czech National Bank reacted to rising inflation by raising interest rates by 1.25% to 2.75%. As a result, loans and mortgages became more expensive. Although mortgages have recently been granted at less than 2.5% p.a., commercial banks are now asking for more than 4%.
Economists predict that mortgages could rise to more than 5% in the near future. This will, of course, also affect the overall spending on property purchases. Clients whose mortgage interest rate fixation is coming to the end must also prepare for higher payments. For example, for a mortgage of 3 million Czech crowns, the monthly payment may rise by around 2 500 Czech crowns. However, it should be remembered that a mortgage is a long-term product and the decision to use this type of financing is made several decades in advance. This means that fluctuations in interest rates are a natural process and should not bother those buying property for personal use or for investment. Because in the long run, the client de facto pays off the mortgage according to the average rate over the whole period.
According to analysts, the rise in mortgage prices will lead to a change in the rental property market. It is obvious that the demand for them will increase, and therefore some people will postpone the purchase of property and will prefer to rent. Based on this fact, rental prices can be expected to rise in the near future, which will have a positive impact on investors. They also expect that the increased rents will be able to cover the increased mortgage costs. But even if you intend to buy a property for personal use, then rising interest rates should not be such a big inconvenience for you, because already in the year 2022, 91% of developers plan to increase the apartment prices by 9%. For this reason, it is better not to postpone the planned purchase of a property. In case you need advice, you can always contact us and we will be happy to help you.
