The real estate market experienced a robust surge last year, despite banks holding back on discounting mortgages. This growth was marked by a 53% increase in new mortgages, totaling 62,000, alongside a 20% rise in the average mortgage amount to nearly 3.86 million crowns by the year’s end. December saw banks issuing new mortgages worth CZK 19.7 billion, though activity dipped by 8% compared to November, a decline attributed to the seasonal Christmas effect by the banking association.
The average interest rate on mortgages in December dropped to 4.80% from November’s 4.85%, yet offer rates predominantly stayed above 5%.Ondřej Šuchman, a mortgage manager from Komerční banka, noted, “Given the December increase in the price of interest rate swaps, it is likely that mortgage rates will not go down as quickly as expected last year.”
Bankers explained that mortgage rates lag by several months in responding to market interest rates of longer maturities. The CBA stated, ”A number of factors are reflected in them, not only the development of the CNB interest rate, but also the combination of the outlook for inflation, the economy and the dynamics of the exchange rate.”
Looking ahead, the association predicts that if the market maintains its current momentum, the volume of new mortgages could hit 250 billion crowns in 2025. Meanwhile, the market is set to welcome thousands of new apartments, though they will be pricier than before, as highlighted in this report.
| Key Mortgage Data | |
|———————–|———————–|
| New Mortgages (2024) | 62,000 (53% increase) |
| Average Mortgage Amount | 3.86 million crowns (20% increase) |
| December Mortgage Activity | CZK 19.7 billion (8% drop from November) |
| Average Interest Rate (December) | 4.80% (down from 4.85% in November) |
| Projected 2025 Volume | 250 billion crowns |
The market’s resilience and the cautious approach by banks suggest a complex interplay of factors influencing mortgage rates. As the landscape evolves, potential borrowers should stay informed and prepared for shifts in the financial terrain.
interview with Mortgage Expert petr Novák
Senior Editor, World-Today-News: Petr Novák, thank you for joining us today. Let’s dive right into the topic. Last year, the real estate market saw a significant surge, even though banks were cautious about discounting mortgages. Can you explain what drove this growth?
Petr Novák: Absolutely. The growth was primarily driven by a 53% increase in new mortgages, totaling 62,000, and a 20% rise in the average mortgage amount to nearly 3.86 million crowns by the end of the year. This surge reflects the resilience of the market, despite banks holding back on mortgage discounts. It’s a testament to the demand for housing and the willingness of borrowers to take on higher loans.
Senior editor: December saw a slight dip in mortgage activity, with an 8% decline compared to November. What’s your take on this?
Petr Novák: This dip is typical for December and can be attributed to the seasonal Christmas effect. People tend to focus on holiday spending rather than major financial decisions like mortgages. It’s a short-term fluctuation and doesn’t indicate a broader trend.
Senior Editor: The average interest rate on mortgages dropped slightly in December to 4.80% from November’s 4.85%. However, offer rates mostly stayed above 5%. What’s the meaning of this?
Petr Novák: The drop in the average interest rate is minimal, and offer rates remaining above 5% suggest that banks are still cautious. Mortgage rates lag behind market interest rates by several months, so it’s expected that adjustments will be gradual. Factors like inflation, economic outlook, and exchange rate dynamics also influence these rates.
Senior editor: Looking ahead, the banking association predicts that the volume of new mortgages could hit 250 billion crowns in 2025. Do you see this as a realistic projection?
Petr Novák: Yes, it’s achievable if the market maintains its current momentum. The introduction of thousands of new apartments, albeit pricier, will also drive demand.However, potential borrowers should stay informed and prepared for shifts in the financial landscape.
Senior Editor: what advice would you give to someone considering taking out a mortgage in the current climate?
Petr Novák: My advice is to stay informed and shop around for the best rates. Mortgage rates are complex and influenced by multiple factors, so it’s crucial to understand the market dynamics. Also, consider your long-term financial stability before committing to a mortgage.
Senior Editor: Thank you, Petr, for your insights. It’s been a interesting discussion, and I’m sure our readers will find it invaluable.
Petr Novák: Thank you for having me. It’s always a pleasure to discuss these important topics.
