Property prices continue to surge in the Czech Republic, forcing citizens to take on increasingly larger mortgages. According to the Czech Banking Association, the average new mortgage amount reached 4 million crowns in February, marking an 18% increase from the previous year’s 3.38 million crowns.
The rise reflects “a combination of higher property prices, wage growth, and lower interest rates,” as stated by the Czech Banking Association. Property prices saw a significant jump of over 10% last year.
While Czech banks remain cautious about reducing mortgage rates, there has been a slight decline. The average interest rate for new mortgages decreased to 4.72% from January’s 4.78%. The Swiss Life Hypoindex, which tracks banks’ offer prices, recorded a six basis point reduction to 5.05% in February.
The financial burden on homeowners has increased substantially, with the average monthly mortgage payment rising by 3,400 crowns to 22,090 crowns year-over-year. Most mortgages now stretch over an extended period of 26.5 years.
February saw robust mortgage activity, with banks and building societies providing new mortgage loans worth 21.1 billion crowns, plus an additional 4.3 billion crowns in refinancing. The number of mortgage loans increased by 37% compared to the previous year, with banks issuing 5,277 mortgages.