Latest News from the Mortgage Market

    Even though the beginning of the year was expected to be calm, the exact opposite is true. In the first week of February, the board of the Czech national bank met on the topic of raising interest rates on loans provided to commercial banks. This type of interest rate affects the rate banks offer to their clients and the percentage of deposits as well. Although the expected result was that the current level would be kept, the Bank Board voted 4:3 in favor of increasing the rates by 0.25% to 2.25%.
    What was the reason for this increase?

  • Expected inflation → faster price growth → inflationary pressures
  • Uncertain prediction of the CZK against the EUR → the response to the increase was an immediate strengthening at the level of CZK 25 = the strongest since 2012
  • Uncertain situation in the export part of the economy
  • The worsened estimate of economic development in 2020

    What effect will the increase have for those interested in the mortgage loans?

    The result is pretty clear. The interest rates on mortgage loans are expected to increase in the coming weeks. To be more precise, forecasts are talking about 0.3%-0.5% rise, varying by each bank. Some of them changed their strategy before the end of the year and started to raise the rates earlier (Hypoteční banka, Raiffeisenbank), while Unicredit banka, Česká spořitelna, and others kept the lower rates until the last moment. Therefore we can expect the rates of these banks to grow more noticeably now.

    The final numbers are coming up shortly. However, further increases are not likely this year. If you are in the process of searching for a property right now and would like to make a purchase soon, you will appreciate the possibility of booking the rate for 30 days. Banks are not allowed to change the number during this period. So you still have some time for property visits and decisions.

    The interest rates on mortgage loans are expected to increase in the coming weeks.

    Do you have any questions about the article or need help with your current situation? Let us know, and we will be more than happy to help you.

    Your C2BCZ team

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