Last year was a year of records on the residential market, when a total of over 17,000 new flats were sold in Prague and the regions. And no wonder – buying an apartment was (and still is) one of the best and safest ways to protect savings. However, the sales pace slowed down in the second half of the year due to record low supply and also rising interest rates, which made mortgages more expensive. The possibility of buying a new apartment on credit will be even thinner for some people in connection with the regulations of the Czech National Bank, which will come into force on 1 April.
Of the new requirements for mortgage applicants, the most restrictive ratio is the total amount of monthly loan repayments of the loan applicant and his net monthly income (the so-called DSTI indicator). It must not exceed 45% (for applicants under 36 the limits are slightly lower). According to Fincentrum Hypoindex, the average interest rate is now 4.62% pa and the average mortgage amount is 3.5 million crowns. If we consider repayment for a period of 30 years, the monthly payment will be less than 18 thousand crowns and the applicant will have to take at least 40 thousand net (less than 51 thousand gross) per month per month. In addition, further rate increases are expected during the year, which could climb up to 6% pa. In such a case, the above-mentioned mortgage would require a monthly salary of almost 60,000 gross, ie 9,000 more. Just to give you an idea, the average Prague wage is now CZK 46,152, so an average Praguer can’t afford an average mortgage even now.
The good news, however, is that the CNB itself expects in its forecasts that rates could start to fall next year. At Central Group, we were the only ones on the market that decided to allow our clients to book an apartment now with the option of arranging a mortgage at any time until the date of completion of the apartment. Until then, there is a high probability that interest rates will be lower. In addition, clients will fix the price of the apartment, which will almost certainly rise, at the current level, and thus actually earn twice. And if the situation develops differently, clients can use our Money Back Guarantee program until the apartment is completed, terminate the contract and we will return all paid money to them.
