The Bank Board of the Czech National Bank lowered on Thursday 26.3.2020 the two-week repo rate (2W repo rate) from 1,75 > 1,00 %. At the same time, it lowered the Lombard rate to 2.00% and the discount rate to 0.05%. The new interest rate levels come into effect on 27 March 2020.
What is the Repo rate?
Repo rate refers to the rate at which commercial banks borrow money by selling their securities to the Central bank of our country. You can understand this as interest rate at which the Czech National Bank lend money regular banks.
How will this affect the mortgage rates?
Lowering the 2W repo rate doesn’t mean automatically that mortgage banks would cut their interest rates overnight!
It is important to mention that the interbanking rates doesn’t have to have immediate effect on regular banks. Last time the 2W repo rate was on 1,00 % between 28.6.2018 – 2.8.2018 – in that time according to www.hypoindex.cz, the average interest rate was 2,49 – 2,53% so even higher than it is today.
We honestly think mortgage rates might go lower, but that is only within few months delay.