In May 2024, new mortgage loans totaling CZK 20.1 billion were issued, according to the Hypomonitor report by the Czech Banking Association. This volume represents a month-on-month increase of 7% and marks the first time the CZK 20 billion threshold has been surpassed since March 2022. Additionally, it corresponds to the level of 2020.
The average mortgage size increased from CZK 3.60 million to CZK 3.63 million, breaking the record set in November 2021.
The mortgage market is significantly influenced by the Czech National Bank’s decisions, particularly regarding interest rates, which the bank’s board has been gradually decreasing since December of last year.
After the CNB cut interest rates by 50 basis points on 2 May, the average mortgage interest rate in May fell by 3 basis points compared to April, reaching 5.07%, the lowest level in the last two years.
The pace of mortgage interest rate reductions is slowing significantly, primarily due to the interbank lending market, which is influenced by the actions and statements of the European Central Bank (ECB) and the Federal Reserve (Fed). The ECB cut interest rates on June 6, while the Fed left them unchanged on June 12, accompanied by a hawkish commentary. The CNB board will meet on June 27, where another rate cut is expected, though it is uncertain whether it will be by 50 or only 25 basis points.
It is possible that mortgage interest rates have reached a temporary low. Nevertheless, 2024 could become one of the strongest years for mortgage loans, which would significantly revive the residential real estate market. The greatest potential for price growth is in properties outside of Prague.