Mortgage rates in the Czech Republic continued to fall in October, reaching their lowest level in more than three years. Loans with a five-year fixed rate became particularly cheaper. Experts anticipate a stable development for the time being – despite global uncertainties and political changes.
Mortgage lending rates in the Czech Republic fell further in October. The Swiss Life Hypoindex dropped by 0.08 percentage points to 4.91 per cent, bringing the average offered rates to their lowest level since April 2022.
A closer look at the data shows that mortgages with a five-year fixed rate were primarily responsible for the October decline. While the average peak offer in September was still 5.15 per cent, it fell to 4.80 per cent in October. Five-year fixed rates are now even cheaper than mortgages with a one-year term (4.92 per cent; down 0.02 percentage points). Interestingly, three-year fixed rates, by contrast, rose slightly – by 0.06 percentage points to 4.57 per cent. Despite this increase, they remain the most attractive option on the market.
Banks are currently responding differently to the market situation. Some institutions are reducing their interest discounts to offset higher refinancing costs, while others are targeting new customers with time-limited promotional offers. These offers are usually linked to additional products.
According to experts from Swiss Life Select, the current stability of mortgage rates is expected to continue for the time being. This is due to global uncertainty following US policy under Donald Trump, as well as the cautious stance of the Česká národní banka and commercial banks.
No direct impulses are expected from the new Czech government either. While Prime Minister Andrej Babiš had promised cheaper mortgages, his influence on interest rate policy is limited. Costly election promises could, in the medium term, instead lead to higher inflation and, consequently, rising mortgage rates.
The Česká národní banka left its key interest rates unchanged in September: the two-week repo rate remains at 3.50 per cent. According to the CNB, inflation is currently close to the target, but monetary policy remains restrictive to stabilise this trend.
Monthly Repayments Continue to Fall
Borrowers are also benefiting from the decline: the monthly repayment for a mortgage of 3.5 million crowns over a 25-year term with an 80 per cent loan-to-value (LTV) ratio fell by 172 crowns in October to 20,278 crowns. This brings the psychologically important threshold of 20,000 crowns within reach.
