Czech mortgage market sees 83% growth in 2024, driven by lower interest rates

Banks and building societies in the Czech Republic issued mortgage loans totaling CZK 275 billion in 2024, marking an 83% increase year-on-year, according to the Czech Banking Association Hypomonitor. Excluding refinanced loans, new mortgage lending also rose at the same rate, reaching CZK 228 billion.

Despite rising real estate prices, the market’s real growth remained robust. The total number of new mortgages issued increased by 53%, with 62,000 loans granted in 2024. The average mortgage size grew by 20%, reaching CZK 3.7 million, and climbed further to CZK 3.86 million by year-end.

In December alone, banks issued new mortgages worth CZK 19.7 billion, reflecting an 8% month-on-month increase and a 56% year-on-year rise. However, the volume of refinanced loans declined to CZK 4.1 billion, comparable to mid-2024 levels. Refinanced loans accounted for 17% of total mortgages, down slightly from earlier in the year.

Interest rates continued their downward trend, averaging 4.88% in December, compared to 5.6% in December 2023. On average, households refinanced their mortgages at 4.72% during December, providing relief to borrowers and reducing monthly repayments.

The lower mortgage rates significantly reduced financial burdens for borrowers. “The December average rate for new loans was 0.84 percentage points lower than a year ago, reducing repayments by 2.2% of the applicant’s net income,” said Jaromír Šindel, chief economist at the Czech Banking Association. Over 2024, the average mortgage rate declined to 5.07%, down from 5.8% in 2023.

According to Šindel, these favorable rates saved applicants CZK 2,300 per month in mortgage repayments. “While rising property prices remained a challenge, the decline in rates largely offset their impact, cushioning the effect of higher consumer prices on real incomes,” he added.

Despite the positive trends, there are signs that mortgage rates may stabilize or decrease more slowly in 2025. “The December increase in interest rate swaps, a key hedging product, suggests that the pace of rate declines may slow,” noted Ondřej Šuchman, mortgage manager at Komerční banka.

The Czech mortgage market’s record growth in 2024 reflects both strong demand and the easing of financial pressures on borrowers. However, market dynamics in the coming year will depend on interest rate trends and broader economic conditions.

Source: CTK