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Personal Finance
Lower instalments right from the moment when interest rates fall
The mortgage interest rate changes continuously as rates change in the financial market.
You can switch to a fixed rate at any time
You can fix your interest rate at any time for the length of fixation you choose.
Early redemption free of charge at any time
You can partially or fully repay your variable rate mortgage at any time.
What is a floating rate?
The size of the floating rate of a mortgage is linked to the PRIBOR reference rate. As the reference rate changes in time, so does the mortgage rate as well.
In practice, this means that your loan is not fixed for a longer period of time as usual, but the interest rate of the mortgage changes continuously as the rates on the financial market do.
The graph shows that when there are low interest rates, it is more suitable to choose a fixed rate to avoid the risk of its possible fast increase.
On the contrary, when the interest rates are high, they can be assumed to be falling gradually, and that is a suitable period to select a floating rate. When such rate drops, the monthly instalment immediately falls as well.
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* Vyplněním a odesláním údajů souhlasím s tím, aby Raiffeisenbank a.s., se sídlem Hvězdova 1716/2b, 140 78 Praha 4, IČO 49240901, zpracovávala mnou vyplněné údaje, a to pro účely nabídky produktů a služeb Raiffeisenbank a.s., která může být učiněna také telefonicky či e-mailem. Tento souhlas uděluji na dobu pěti let. Beru na vědomí, že poskytnutí tohoto souhlasu je dobrovolné, mohu souhlas kdykoliv písemně odvolat a že mám právo požádat Raiffeisenbank a.s. o informaci, jaké údaje o mě zpracovává, a o opravu údajů.
What mortgage rate will I have when I choose a floating rate?
The mortgage rate consists of a reference rate (PRIBOR 1M) and a fixed deviation. In practice, this means that the rate of your mortgage will always be valid for 1 month and then it will be recalculated based on the current value of PRIBOR.
The fixed deviation remains constant over the entire period of time during which you have set a floating rate. It is set for every mortgage individually and it will be communicated to you by the mortgage advisor during an unbinding calculation.
The reference rate is a monthly PRIBOR, announced by the Czech National Bank (the valid size can be found here).
Example: The value of PRIBOR 1M is 7.00% and the fixed deviation is 1.00%. Thus, the mortgage rate is 8.00%. In the following month, the value of PRIBOR 1M drops to 6.50%. Thus, the mortgage rate drops to 7.50% (6.50% + fixed variation of 1.00%).
For what products can the floating rate be used?
The floating rate can be agreed for dedicated as well as for not dedicated loans.
What if the situation on the financial market does not develop as I have expected it?
As the rates may drop, one cannot rule out their growth, either. Having a floating rate, one must bear in mind that the rate as well as the instalment of your mortgage may also increase. In such a case, the interest rate may be fixed at no cost for your preferred period of time to prevent its further increase. You may of course switch from a floating rate to a fixed rate also in the case of falling interest rates.
What other benefit do the floating rates have?
In the case of a floating rate, the interest rate will usually be lower in the long run compared with mortgages fixed for several years.
This needs to be accounted for should you wish to switch from a floating rate to a fixed rate. At a given moment, the fixed rate may possibly always be a little higher than the valid floating rate. This is the price for certainty that your rate will not change during your fixed period of time.
For what products can the floating rate be used?
The floating rate can be agreed for dedicated as well as for not dedicated loans.
May I redeem a mortgage with a floating rate early?
Be it a partial or a full redemption, an early redemption of a mortgage with a floating rate is possible at no cost and at any time.