Increase if the interest rates, the ending of the fixed interest rates, the increase of the payments. Topics which are probably bringing you no peace. It is estimated that until the 2025, the payment increase will have involved every second mortgage, making it approximately 300 000 mortgages1.1Question of the already existing mortgages and their payments is also included in the last NBS report in May 20232.2 . NBS expects, that in case of the households, only a small part of the portfolio will be affected by the payment inability (6% of the mortgages and 9% of the loans).
In the next two years, we expect that up to 30% of earlier provided mortgages will have to change their fixed interest rates. The bank usually contacts their clients 6-8 weeks before the planed increase of the interest rate. We recommend the clients to also contact other banks as from our experience they are willing to prepare better conditions and deals as your current bank. If you are affected by these situations, we are here to help you, for free.
NBS informs that the increase should affect, on average, 7% of the household’s income, which means that most of the clients will have higher expenses by 100€. The higher increase, by 20%, should affect only 1% of the mortgages3.3
Let’s have a look at the below calculation on how the refix could look like by the 200 000€ mortgage.
In the first chart, we re-calculate the payments by the same mortgage amount however with the different interest rates.
| mortgage amount | mortgage lenght | interest rate | payment |
| 200 000 € | 30 | 0,5 % | 598 |
| 200 000 € | 30 | 4,5 % | 1013 |
| 200 000 € | 30 | 4 % | 954 |
Should the case be, that the 3-year fixed rate of 0,5% is reaching the end, the bank offers the new rate for the next 3 years with the current conditions. In the second chart you can see the informative mortgage balance and the new payment for the next 27 years.
| Mortgage amount | mortgage lenght | interest rate | payment |
| 180 800 € | 27 | 4,5 % | 965 |
| 180 800 € | 27 | 4 % | 913 |
The payment increase in this case is more than 300€. Clients, with the higher amount’s mortgages will be affected more than those with the smaller amounts as the difference is less considerable with the smaller mortgages.
From the historical point of view, similar ups and downs were not extraordinary as the interest rates were much higher. In 2013, 10 years ago, the average interest rate was 3,33%. In 2003, it was almost 8,5%. What may look like a problem is a fact, that the rates in the last years skyrocketed and thus making this situation more dramatical that it really is.
These kinds of situations should be taken responsibly and clients should be ready for the excepted changes. Should there be any problems, they need to be communicated in time with the bank, which approved your mortgage,
If you are concerned about your situation, do not hesitate to contact us. We are here for you anytime!
Best regards Team ProFin Experts
