Average Czech mortgage rate drops slightly to 5.11% in February, lowest since 2022

The average mortgage rate in the Czech Republic edged down slightly at the start of February, decreasing by 0.02 percentage points to 5.11%, its lowest level since spring 2022. This data, released by the Swiss Life Hypoindex, reflects the average mortgage offer rate for loans covering 80% of a property’s value.

According to Jiří Sýkora, mortgage analyst at Swiss Life Select, the current trend aligns with predictions of a slight decline or stagnation in rates at the beginning of the year. “New mortgage deals can be arranged with rates approximately three-quarters of a percentage point lower for certain fixations and estimated property values. However, there are still offers on the market with double-digit rates,” he noted.

Sýkora anticipates a more significant drop in mortgage rates in the coming months, as banks introduce spring special offers featuring reduced interest rates.

Market experts highlight the importance of actions taken by major mortgage lenders, including Česká spořitelna, ČSOB, and Komerční banka. “Competition among banks is a key factor that could drive mortgage prices lower. While some banks have already made modest cuts, the impact could be more significant if other players follow suit,” said Tom Kadeřábek, head of the Swiss Life Select product department.

Rising mortgage rates pose challenges for households whose fixed-rate loans are set to expire this year. Many borrowers secured rates around 2% five years ago, while today’s average is approximately 5%. In 2020, mortgage rates hovered around 2.4% in early months and dipped to around 2% by December. The difference in interest rates now translates into thousands of crowns in additional monthly payments.

For instance, a CZK 3.5 million mortgage with an 80% loan-to-value ratio and a 25-year term at the current 5.11% rate results in a monthly installment of CZK 20,692 in February. Compared to February 2024, when the average rate was 5.6% and the monthly installment stood at CZK 21,703, borrowers today save more than CZK 1,000 per month.

Source: CTK