The average mortgage interest rate in the Czech Republic dropped below 5% at the start of May for the first time since spring 2022, according to data from the Swiss Life Hypoindex. The rate declined by 0.05 percentage points compared to the previous month, reaching 4.96%. The index reflects average mortgage offer rates for loans covering 80% of a property’s value, based on rates available at the beginning of each month. Analysts note that the market currently shows no clear drivers for a significant drop in mortgage rates. The most competitive offers are for loans with a three-year fixed rate, averaging around 4.6%. “We are seeing a continued, gradual decline in mortgage rates,” said Jiří Sýkora, mortgage analyst at Swiss Life Select. He attributes the slight decrease to ongoing monetary policy easing and promotional offers from some banks this spring. In recent weeks, ČSOB, Moneta Money Bank, Fio banka, Air Bank, and Komerční banka have all announced rate reductions. “Banks are not lowering mortgage rates as aggressively as they could, though there are exceptions,” Sýkora added. He observed fewer promotional campaigns to boost mortgage sales this spring compared to previous years, suggesting that banks are generally satisfied with current loan volumes and new mortgage agreements. The outlook for the coming months points to a continued, gradual decline in rates, though the pace is expected to remain slow amid global economic uncertainty. “Today’s meeting of the Czech National Bank’s board will likely result in another cut to the key interest rate, but this may have only a limited effect on mortgage rates,” said Tom Kadeřábek, head of the product department at Swiss Life Select. Kadeřábek pointed to international factors—such as U.S. trade policy under President Donald Trump—and their uncertain impact on the Czech economy and inflation. “If President Trump were to ease his rhetoric and continue concessions from earlier positions, it could pave the way for a faster drop in mortgage rates. Ultimately, however, the decision lies with each individual bank,” he explained. Daniel Horňák, analyst at Bidli, noted that current market conditions do not favor more substantial rate cuts. “Loan volumes are strong, mortgage demand remains high, and banks do not feel pressure to attract borrowers through deeper rate reductions,” he said. Jan Štěpánek, regional director at Century 21, suggested that while lower rates may benefit some higher-income buyers, the broader effect on housing affordability will be modest. “There’s no indication that banks are planning significant discounts or more aggressive marketing campaigns for housing loans,” added Jan Sadil, director at the JRD Group. Source: CTK