Average offered mortgage rates in the Czech Republic rose again in November. The Swiss Life Hypoindex climbed 0.17 percentage point to 5.96 percent, its eighth consecutive monthly increase. Mortgage rates have now risen steadily since March, when the index reached its low of 4.89 percent.
Analysts said the pace of increases may be slowing. Interest rate swaps fell in early November, and the three-year swap dropped from 4.95 percent at the end of October to 4.6 percent. The FRA-implied rate currently stands at 4.75 percent, down from 5 percent in late October.
Cost for borrowers
Swiss Life Select calculated the effect on a model mortgage of 3.5 million crowns over 25 years. The monthly payment rose from 20,240 crowns in March to 22,464 crowns in November, an increase of 2,224 crowns.
Jiří Sýkora, a mortgage analyst at Swiss Life Select, called the figures another unpleasant message for prospective homebuyers. Tom Kadeřábek, head of the product department, said rates may still edge up in the coming weeks. He added that he increasingly believes the market is approaching a peak.
Central bank and markets
The Czech National Bank raised its two-week repo rate by 0.25 point to 4 percent the previous week. Markets had largely priced the move in advance. Michal Skořepa, an economist at Česká spořitelna, linked the recent fall in yields to the US midterm elections and to recent CNB comments that market rates were unreasonably high.
Kadeřábek sees room for gradual mortgage cheapening in the first quarter of next year, provided the geopolitical situation does not escalate.
Source: Czech National Bank · Swiss Life
