Despite a slight increase during the summer, mortgage market rates are still record low. People are attacked from each side by bank offers that have long been claiming that rates will not go down. It may or may not be true.
The development of interest rates on the Slovak market depends on what is happening outside Slovakia and are things that we can not influence. Inflation, which most countries in the EU want, is still not coming.
Whether with low inflation, we will struggle like the Japanese for decades, or we will experience different developments, we will know in the future. Any general prediction is just a lottery. The price of mortgages in Slovakia will also depend on this.
Will apartment prices rise or fall?
In older flats in some parts of Bratislava, I observe in 2015 an increase in advertised prices as well as real purchase prices. In extreme cases, prices are almost the price of new buildings in the outskirts of Bratislava.
The prices of new buildings are, in many projects, set reasonably and their purchase is for many people more advantageous than the purchase of relatively expensive older prefabs. Developers cut their margins and offer apartments at lower prices than in the past.
New buildings have significantly lower real estate costs and higher living comfort than older apartments. Buyers take this into account and calculate in advance the costs they will have to pay.
I am based on my own statistics of my clients, where I monitor the prices of the sold and purchased properties. I’m not a realtor, I’m a financial intermediary. Statistics can be influenced by the selection of clients where I deal with a mortgage to finance the purchase of real estate.
Older apartments vs. new
Prices of some old apartments are still growing. It is only a matter of time before the increase in the number of new buildings, where a good price is set, will affect the price of older apartments. Logically they will have to go down, respectively. they will stagnate or grow at a slower pace than will be the case with new buildings.
A relatively good number of new projects are being launched in Bratislava, bringing the market quality apartments in good locations with good civic amenities. It is assumed that many people prefer a new building in front of an older block of flats. Let’s see what it does to the prices of the old prefabs.
People are again buying apartments that are still on paper
This year, I am seeing increased interest in financing the purchase of apartments that are still on paper. People after the crisis in 2008 gained confidence in the real estate market. The developers have built this trust into new projects.
There is still a demand for quality apartments. We currently have a lot of people interested in finding an apartment that suits them. Despite the great offer, there is nothing to choose from. Either the quality of the property is unsatisfactory or an unsuitable price is set for the apartment. I myself could have convinced myself of buying my own property.
How can a larger housing offer affect the mortgage market?
The mortgage market also reflects what is happening in the property market. If people want to buy and offer demand, banks want to borrow. If there is a large amount of real estate on the market and no interest in buying it, the mortgage market will also be negatively affected.
If nothing else happens, which affects the real estate market, the increased supply of new buildings can push down the price of older apartments, and banks will be more cautious in financing the purchase of older apartments that people will also use the collateral for the bank .
Already now, thanks to the NBS recommendation last year, banks provide 100% mortgages very carefully. If the price of older apartments falls compared to new buildings and there is also a negative outlook for future developments, banks can provide lower LTVs for older apartments.
It’s just my consideration. The reality may look completely different. Events that do not affect central banks, financial crises, military conflicts, natural disasters, political decisions, civil unrest, etc. may have a greater impact on more serious changes in the real estate and mortgage markets.
Any serious event in another part of the world can cause changes also indirectly here. We have experienced it several times in the past.
Mortgages are still record low
Interest is still low. The rates of several banks are still below 2%. Anyone who is currently thinking about his own home is being challenged by this situation to take the mortgage right now.
The mortgage refinancing market is still alive. The large volume of newly provided loans is just refinancing. People in large exchange old mortgages for new ones. Oftentimes, this step saves tens of thousands of euros a month. It depends on the height of the mortgage.
Before choosing a bank to finance a purchase of an apartment or refinance an old mortgage, first review all the opportunities the market offers. Choose a bank to get the lowest interest and pay the lowest fees.
You can circulate all banks yourself or you can reach financial intermediary. It’s up to you It is important that you choose a mortgage that will save you.