Mortgage interest will decline, so some customers will want to refinance their loans. “Mortgage predators” are also on the lookout. They take customers from one bank to another for savings of a few tenths of a percentage point.
Already in December the Czech National Bank froze interest rates. And it announced that it will continue to reduce them at the same rate throughout the year. As for the meeting of the bank’s board of directors, one percentage point less on Thursday. At the end of the year we could be at 4% base interest rate.
The trend will also be reflected in mortgage prices. After all, the price of assets (so-called interest rate swaps) that banks purchase to “buy” money for customers also decreases.
Mortgage specialist Tomáš Rusňák believes that a wave of compensation will be launched during the year: “It would happen, I’m absolutely sure. The moment the rates are lower, this is what will happen. The last time the avalanche was in 2021, the share of refinanced loans was huge,” he told the Ve váte podcast.
According to Libor Ostatek, mortgage expert at Broker Trust and Golem Finance, we are in a different situation than three years ago. Banks will want to build customer loyalty through sheer power. “I don’t think there will be mass bank-to-bank refinancing if there are banks, and now I’m talking mainly about large players, willing to come closer to adjusting interest conditions to existing fixings. For the bank it is economically more advantageous not to lose a customer,” says Ostatek.
According to him, even the commission that should compensate the bank for the client’s departure before the end of the fixing period will not compensate for the loss of financial institutions. The law established that the customer who withdraws from the contract before the end of the fixation period will pay a maximum of 1% of the unpaid principal as “compensation”. “They can partly blame themselves. The bank charged the customer 40,000, but in a similar case also 120,000, it ended up with the financial arbitrator,” says Ostatek Ve váte.
Contact your bank. They don’t always go well for you
How many people are theoretically affected by the possibility of switching to another interest rate in the next few years? According to data from the Czech National Bank, Jakub Seidler, chief analyst of the Czech Banking Association, estimated that this year alone the fixing of 80,000 mortgages will end, next year the fixing period for around 100,000 loans will expire and in 2026 the fixation will expire for 130,000 mortgages.
Banks fear that the refinancing carousel will begin. The Komerční banka group announced an unprecedented step some time ago. No commission will be paid to loan brokers who intentionally move customers from one bank to another. “We don’t want to actively attack other banks’ portfolios when rates go down,” Michael Pupala, head of Modrá Pyramida, told SZ Byznys.
Customers should above all turn to their own bank, urges “Komerčka” not only to customers of competitors, but to the entire market. However, according to Ostek, not everyone will be able to succeed in the current bank. “There could be a situation where I come to the bank too early,” he says. According to him, it is not normal to go to the bank every six months to ask for a new rate.
We don’t want predators here
So far none of the other banks have publicly followed the step of not paying fees for customers transferred by competitors. But according to mortgage experts, this could cleanse the market of “predatory” home mortgage brokers.
“In the space that will open up, we should aim to prevent predatory practices that continuously refinance the customer. At the same time the customer could have achieved the same result in the existing bank too,” explains Ostatek. “Personally I am not in favor of this solution, because it penalizes a distribution group.”
“The pig farms that take place here at the market have bothered me for a long time. For Komerčka, how the rest of the market reacts to this will be crucial,” adds Tomáš Rusňák.
How long to wait for repair or refinancing? And where will mortgage rates go in the coming months? Listen to the entire podcast.
Made of hydrophilic cotton
Podcast by journalist Markéta Bidrmanová and her guests. Hear advice from well-known investors and experts on investments, inflation, credit and mortgages. A financial “pocket” for everyone whose money is not stolen.
2024-01-25 06:21:03
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