Mortgages Slightly Cheaper, Renewed Interest in Them Emerges

In August, the average negotiated mortgage rate in the Czech Republic dropped slightly below the 5.8 percent mark. Offered rates most commonly ranged between 6 and 7 percent, according to the Hypomonitor of the Czech Banking Association.

“Mortgage rates are decreasing very slowly. Despite some revival in the market, the volume of mortgages granted since the beginning of the year is still the lowest in the past ten years,” said the association’s chief economist, Jakub Seidler.

Banks and building societies provided mortgage loans worth 14 billion Czech crowns in August, a quarter more compared to July. Simultaneously, this represents the most significant monthly volume since June of the previous year.

The number of newly granted mortgages increased from 3,100 in July to nearly 3,700 in August. This is about half the average from three years ago and even three times less than the mortgage peak in 2021 when the monthly average of new mortgages was around 9,500.

According to Filip Beneš, the manager of mortgage loans at UniCredit Bank, there is a growing interest in so-called green mortgages and loans for 90 percent of the property value. This indicates a rising ecological awareness in property financing.

Without refinancing, mortgages granted genuinely afresh in August reached 11.5 billion Czech crowns, compared to July’s 9.5 billion. Refinanced loans amounted to 2.6 billion Czech crowns, compared to July’s 1.9 billion.

Interest rates are slightly declining according to the Hypoindex by Swiss Life. Last week, it was reported that the average mortgage rate in September dropped to 6.1 percent, hinting at more favorable conditions for potential mortgage applicants in the following months.