Current situation on the Czech Mortgage and Real Estate Market in the middle of the year

At the beginning of the year, the average mortgage interest rate reached its minimum. The one-year gradual reduction of interest rates ended this spring and rates are starting to rise again. However, their growth is now hampered by competition between banks.

The Czech National Bank (CNB) also raised interest rates in June; therefore further increases in mortgage rates can be expected in the future as well. The rise in interest rates meant only a slight decline in interest in mortgages, which was a record due to low rates. CNB has currently raised interest rates by 0.25%, mainly due to rising inflation in the Czech Republic and negative consumer inflation expectations.

At the same time, the CNB admits that the price of real estate on the Czech real estate market could be significantly overestimated. In the last year alone, according to statistics, the price of real estate has risen by 12% year-on-year. After Hungary and Luxembourg, the increase in housing unit prices in the Czech Republic was the highest in the entire European Union.

Non-declining interest in real estate and ever-increasing inflation will encourage further price increases in the future. This situation is also caused by the fact that supply lags behind demand in the long run.