Record-Breaking Increase in Czech Mortgage Lending

In a dramatic surge, Czech banks and building societies granted mortgage loans of 23.7 billion crowns in May. This represents an 8% increase compared to April and a whopping 92% rise year-on-year. The interest rates on new loans dropped to 5.07% from 5.1% in April, the lowest figure since June 2022. These statistics were provided by the Czech Banking Association’s Hypomonitor, with data sourced from all Czech banks and building societies offering mortgages.

According to the association, the speed of month-on-month rate decreases has slowed compared to previous months due to fluctuating market interest rates, which started to increase again in mid-March. The volume of newly granted mortgages, excluding refinancing, reached 20.1 billion crowns in May, crossing the 20 billion threshold for the first time since March 2022. In April, the figure was 18.8 billion crowns.

The volume of refinanced loans, whether internally or from another institution, amounted to 3.6 billion crowns. The proportion of refinanced loans in the total volume of granted mortgages in May was 15.1%. According to the main economist of the Czech Banking Association, Jakub Seidler, “The May and April numbers confirm a solid revival of the mortgage market.”

The average mortgage in April rose from 3.6 million to 3.63 million crowns, reaching a new maximum level. The gradual decrease in mortgage rates or relaxation of limits by the Czech National Bank facilitates achieving a higher mortgage. An increase in mortgage rates by one percentage point means an increase in the monthly installment for an average mortgage by approximately 1500 to 2000 crowns.

Compared with a two-percent interest rate, which was common in the market in earlier years, the current mortgage rate means an increase in the monthly installment of an average mortgage by approximately 6000 crowns.