Mortgage market 2023

According to the plans announced by the central bankers of the Czech National Bank (CNB) in 2023, the price of money will remain high, resulting in expensive mortgages. The CNB’s strategy is to maintain the 2T repo rate and control high inflation through foreign exchange interventions in the currency market. However, they may reduce the basic rate that directly determines mortgage prices in the third quarter of 2023.

The level of inflation, which reached 16.7% in February 2023, is the crucial factor for determining when to start the reversal. However, the passivity of central bankers makes it unlikely for inflation to improve quickly.

In 2022, the mortgage market activity decreased by over 60%, with financial institutions providing CZK 197 billion in housing loans. However, in December 2022, the year-on-year decline was significant at 82%, with only CZK 7.89 billion provided. According to the Czech Banking Association, the mortgage index, which consists of interest rates on newly granted mortgages without refinancing, reached 5.98% in December.

In the second half of 2022, the financing purposes structure changed, with a greater focus on the reconstruction of existing properties to achieve lower energy demand. Conversely, purchases of flats and family houses dramatically decreased, while refinancing accounted for less than 16% of the total.

Mortgage interest rates 2023

The monetary stability established by the CNB brings a sense of calm and transparency to the mortgage market, allowing commercial banks to better plan their business goals. Due to high trading margins and a sluggish mortgage market, negotiating discounts will become increasingly important for individuals seeking mortgages.

However, in the long run, mortgage interest rates in the range of 5.5-6.3 % per annum are expected to remain high.

Mortgage index

Average mortgage April 2023:
The average amount of the mortgage fell slightly below CZK 3 million, which reflects falling real estate prices and a stagnant real estate market.

Refinancing
Most banks usually offer interest rates for refinancing previously granted loans with lower rates against new mortgages. The ability to verify the client’s history allows banks to reduce the trading margin. It is currently possible to get rates from 5.59% p.a.