Others are expected to follow as two Czech banks raise mortgage rates

ČSOB has announced that it will increase interest rates on three-, five- and seven-year mortgages by 0.3 percentage points from next Monday. The most frequently used new mortgage interest rate, with a five-year fixed rate, will be 2.99%.

For his part, Česká spořitelna will increase mortgage interest rates by 0.4 percentage points on average from Thursday. The interest rate on the five- and eight-year fixed rates will therefore start at 3.14% per annum.

The Czech news agency reported that other banks in the Czech market are also considering charging more for mortgages.

Moneta Money Bank said it will do so from the end of the week. Meanwhile, Raiffeisenbank is considering raising rates and Komerční banka and UniCredit Bank have not ruled out such a move.




Photo: Filip Jandourek, Czech Radio

The board of directors of the Czech National Bank raised the key rate by 0.75 percentage points to 1.5% last week.

The main reason for this rise is the rapid rise in inflation, which exceeded 4% in August.

ČSOB board member Jan Sadil told the Czech News Agency that two years of record mortgage rates were behind us. It is now necessary to adjust their level according to the evolution of the market, he said.

However, Mr Sadil said his bank did not expect rising mortgage rates to be a big deterrent for people to take out home loans.

Filip Belantz of Česká spořitelna said his bank expects interest rates to continue to rise. He said the prime rate, by which mortgage rates are set, could reach 2% this year and up to 2.5% next year.

Mr Belantz said that for this reason, Česká spořitelna recommends that clients choose long-term fixed rates; these offer the security of a stable repayment amount and unchanged rates, in principle for the duration of the mortgage repayment, he said.

The average mortgage rate rose to 2.32% in August from 2.23% in July, according to data from Fincentrum Hypoindex.

Experts say the CNB’s Thursday step could lead to a faster acceleration in mortgage interest rate growth.

Veronika Hegrová of Hyponamir.cz told the Czech News Agency that the previous advice to get a mortgage as soon as possible was doubly true now.

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