News Article banks Czech Republic mortgage report residential Swiss Life Hypoindex
by Property Forum | Report

The beginning of February has brought a sharp fall in bank rates in the Czech Republic, and housing loans are thus the cheapest in more than a year and a half, reports.

According to Swiss Life Hypoindex, banks offered mortgages at an average rate of 5.6 % this month. This means a massive drop of almost four-tenths of a per cent compared to January. The primary reason is the falling cost of resources from which banks finance mortgages, betting on an interest "revolution" at the Czech National Bank for the rest of the year.

"The trend of banks is to discount especially the shortest fixations for one or two years. On the other hand, fixations lasting seven, 10 or more years should increase in price or stop being offered altogether. This trend in the development of mortgage rates can also be expected in the coming months, also due to the further expected reduction of basic interest rates by the Czech National Bank," says Jiří Sýkora, Mortgage Analyst at Swiss Life Select. According to him, by the end of the year, average rates could fall to around 4 %.

The basic framework for the development of the interest climate in the economy is the interest rate of the Czech National Bank. After more than two and a half years, in December 2023, it lowered the interest rate from seven to 6.75 %, and in early February, it lowered the base rate by another half of a percentage point. At the same time, the market expects a gradual further reduction of rates to levels of around 4 % at the end of this year.