Czech mortgage volumes fall as interest rates rise to 5%

Mortgage activity in the Czech Republic saw a decline in August, with the volume of mortgage loans provided by banks and building savings institutions falling by 15 percent compared to July. Total mortgage volume for the month reached 34.5 billion CZK, a 4 percent increase year-on-year.

Average interest rates rose to 5 percent in August, up from 4.9 percent in July. The number of new mortgages decreased by 13.1 percent month-on-month to 5,825 units. Refinancing costs are also increasing, with the average refinancing rate reaching 4.97 percent, significantly higher than the 2.33 percent average seen in 2021.

Looking ahead to regulatory changes, new rules for investment mortgages will take effect on April 1, 2026. These include a Loan-to-Value (LTV) limit of 70 percent and a Debt-to-Income (DTI) ratio limit of 7. These measures are expected to impact how investors manage their real estate portfolios and debt capacity.