Czech National Bank increases interest rates, mortgages will be more expensive

The Bank Board of the Czech National Bank ("CNB") raised the basic interest rate for the second time this summer, which is now running at 0.75 percent. The level of the basic interest rate also affects the rate of mortgage loans. Mortgages will thus most likely become more expensive in the future.

By its decision, the CNB confirmed its expectations regarding the increase in the base rate. After more than a year of declining rates, the situation reversed this spring and interest rates began to rise sharply. The prices of basic inputs are rising as well, including building materials. The future rise in real estate prices may be largely conditioned by the current prices of raw materials that will be used in construction.

The CNB justifies the rise in interest rates by returning interest rates to pre-pandemic levels, as low rates were intended to support the economy, especially in times of crisis. Banks are already raising interest rates on new mortgages. Only exception is the ČSOB Group, others have decided to increase their rates and prices.