The Czech mortgage market is showing remarkable resilience despite rising property prices. According to the Czech Banking Association’s (ČBA) Hypomonitor, banks and building societies provided housing loans totaling 27.4 billion crowns in May, marking a 5% increase from April and a significant 33% year-over-year growth.
The market saw 6,610 new mortgages in May, leading ČBA’s chief economist Jaromír Šindel to project that the total volume of new mortgage loans could reach 290 billion crowns this year. This strong performance is partly attributed to declining interest rates, with the average rate for new mortgages dropping to 4.6% in May from 4.65% in April.
Currently, homeowners with an average mortgage of 4.14 million crowns on a 30-year term are paying monthly installments of 21,220 crowns, approximately thousand crowns less than a year ago. However, the benefits of lower interest rates are being offset by rising property prices, effectively increasing the actual cost for borrowers.
Looking ahead, experts predict a continued gradual decline in rates, though dramatic changes are unlikely. Swiss Life Select’s mortgage analyst Jiří Sýkora forecasts modest quarterly decreases of 0.1 to 0.2 percentage points. He cites multiple factors, including the Czech National Bank’s cautious approach to inflation, geopolitical uncertainties, and monetary policy developments in the Eurozone, making a quick return to sub-4% rates unlikely.