CBA Hypomonitor: April stabilized strong mortgage rates at 4.65%
Despite the slight correction, April continued to see strong volumes of new mortgages supported by another slight decline in the average mortgage rate to 4.65%.
Prague, 16 May 2025 - In April 2025, banks and building societies granted new mortgages worth CZK 26 billion. Compared to March, the volume of activity weakened by 4%, which corresponds to both a seasonal effect and a slight correction after a stronger March. The average realised mortgage rate fell slightly further to 4.65% from 4.68% in March. Its year-on-year decline of 0.44% points reduces monthly repayments by more than CZK 1,000, approximately 1.2% of the mortgage applicant's net income. The average size of a genuinely new mortgage rose slightly to CZK 4.08 million in April, lifting the monthly repayment by more than CZK 2,500, or around 3% of that income year-on-year. If mortgage lending maintains the momentum of the last two months, the volume of new mortgages could reach CZK 293 billion in 2025, up more than a quarter on last year. This level would remain about halfway between the 2020 (CZK 224bn) and 2021 (CZK 379bn) covenant years for the full year. The information is based on data from the CBA Hypomonitor, which captures data from all domestic banks and building societies providing mortgage loans.
April brought a slight correction after March's boom in new mortgage originations
In April, banks and building societies actually granted new mortgage loans worth CZK 26 billion, and in addition, clients refinanced or increased their mortgages to the extent of CZK 6.2 billion. Compared with March, new mortgage activity thus fell by around 4% in volume terms, which corresponds both to a seasonal effect (usually the volume of new mortgages falls by 10% month-on-month in April; the previous month it rose by 29% compared with the usual 23%) and to a slight correction after the strong March volume. After seasonal adjustment, April's figures brought a slight decline (to around CZK 23.9bn compared to CZK 24.3bn in the previous three months). Their volume is thus less than half that of the first ? last year. In year-on-year terms, the growth in the volume of mortgages granted slowed to 37% in April from 75% in March and after an 83% year-on-year increase last year.
The number of new mortgages in April reached 6,389, up 21% from a year ago. We estimate the seasonally adjusted number to be around 6064, around 1% below the average number (6103) in the previous three months. The momentum in the number of new mortgages over the past two months implies an increase to a total of around 73,000 this year, which would be almost a fifth higher than last year and close to the 2019 number.
Table 1: Summary of mortgage origination volumes and average interest rates for April 2025
| Volume | Number | Rate |
| |||
Total | 32,2 | 8 148 | 4,63 |
New loans | 26,0 | 6 389 | 4,65 |
of which: | | | |
for purchase | 20,5 | 4 935 | 4,64 |
for construction | 4,3 | 1 078 | 4,61 |
Other | 1,2 | 376 | 4,87 |
Refinanced from another institution | 4,8 | 1 402 | 4,63 |
Refinanced internally | 1,4 | 357 | 4,40 |
Source. | | | |
"In the first four months we can observe dynamic growth in the mortgage market and in building societies. Although the building savings market focuses mainly on renovation and unsecured housing loans, we have almost 80% year-on-year growth in secured loans as well.Among other things, this is helped by a relatively dynamic decline in the average interest rate in the first months of 2025, against a slow decline in 2024," says Michal Noha, product manager at Raiffeisen Stavební spořitelna.
The volume of refinanced and increased loans (internally or from another institution) rose to CZK 6.2 billion in April. This is 58% above the average 3.9 billion refinanced last year and 188% above the 2.2 billion refinanced in 2023. The share of refinanced loans in total mortgage originations then rose to 19.3%, above last year's average of 16.9%. This is above the 17.2% share from 2022-2023, but still below the nearly 29% share from 2020-2021, when households refinanced at a mortgage rate of 2.14%. Meanwhile, in April 2025, households refinanced at a rate of 4.57%, still down a significant 0.5% point from 5.04% last April.
The average mortgage rate continues its downward trend
The average realised interest rate on new mortgages fell slightly further to 4.65% from 4.68% in March.Its reduction thus confirms a downward trend below the 5% last seen in July 2024. Its April level is thus 0.44% points lower than the 5.09% rate a year ago, reducing monthly mortgage payments by around 1.2% of the applicant's net income, or 1.1k points. CZK. By comparison, the average mortgage rate in 2024 was 5.07% compared to 5.81% in 2023.
Chart 1: Average mortgage rate - new business
April's mortgage rate at 4.65% is less than half a percentage point lower than a year ago.
Source.
"So far it looks like the mortgage market is stable.Although the volume of mortgages has increased, which may indicate a slight recovery, the overall situation is stable for now and depends on economic conditions and interest rates in the future, whether there will be a more significant market recovery," says Soňa Holíková, mortgage manager at mBank.
In the past month, three factors were evident that influenced the direction of longer-term market interest rates, which have a key impact on mortgage rates: 1) the May CNB interest rate cut to 3.5%. However, this is countered by 2) at least a temporary calming of the tariff wars; and 3) Czech inflation numbers, which provided a rather hawkish signal for CNB policy. The last two of these factors contributed to a slight correction, i.e. a rise in market interest rates after their April plunge, when markets priced in the risk of weaker economic growth following the introduction of Trump's reciprocal tariffs. For example, Czech five-year interest rate swaps fell 0.3% points to 3.3% in April from 3.6% in March. On the other hand, this did return them to late summer 2024 levels. However, rather positive or inflationary data in May has so far returned five-year swaps to 3.4%.
The mortgage rate on new mortgages fell to 4.65% in April, according to Hypomonitor.It was thus approximately 1.4% points above the average market swap rate, which is approximately 0.3% points above the long-term average since 2014. Unless there is a more significant upward correction in market interest rates (which would be possible in a scenario where the risk of tariff wars disappears, i.e. with stronger economic growth), then the current gap between mortgage rates and market rates should contribute to a further decline in mortgage rates.
1 These are primarily long-dated interest rate swaps (IRS), which reflect the cost of money at longer maturities, such as 2 to 10 years.
"Maintaining the current momentum in new mortgage lending would deliver a credit impulse of 3.4% of GDP. This would be a more significant recovery after the 1.5% and 2.7% impulses in 2023 and 2024, and would thus represent a return to the impulses of 2017-2018. However, the number of new mortgages this year would probably be more likely to reach 2019, when new mortgages delivered a 2.7% of GDP impulse to the economy," adds Jaromír Šindel, chief economist at the Czech Banking Association.
Average mortgage size rose slightly in April, but more so for mortgages for purchase
The average size of an actual newly granted mortgage rose slightly to CZK 4.08m in April. The number of new mortgages for mortgages increased by CZK 4.5 million. Its size is thus 14% higher than the CZK 3.59 million in April. CZK a year ago. This reflects a combination of higher house prices (see chart below with the higher increase in the average mortgage to buy), rising wages and lower interest rates. Leaving aside the exceptional value of almost £4m. The average value has been rising steadily since January and is 18% higher than the previous record level of 3.46million in November 2021. CZK. A gradual decline in mortgage rates or a gradual increase in real household incomes, together with the CNB's continued easing of macroprudential income limits, is making it possible to achieve a higher mortgage. Mortgage rates are also linked to the development of property prices, which rose by more than 10% year-on-year last year (see CBA Monitor).
Chart 2: Average amount of new mortgages actually granted by purpose
The slight increase in the average mortgage amount in April, however, hides a higher average amount for purchase mortgages at CZK 4.16 million. The figure for mortgages is higher at CZK 1.4 million.
Source.
Impact on the average instalment
The combination of the fall in the interest rate and the higher average mortgage amount in April 2025 compared to the 2024 averages increased the average monthly mortgage payment by CZK 1.3k. Kc. The scenarios for the evolution of the monthly payment for different mortgage maturities are shown in Table 2. It suggests that a fall in mortgage rates of over 0.4% points relative to their average rate of 5.07% in 2024 would, for an average mortgage size of around 26.6 years, reduce the monthly repayment by more than CZK 1 000 to around CZK 22 300. This represents a reduction of CZK 1.1% of the applicant's net income compared to the average repayment in the previous year. Compared to the average mortgage rate of 5.81% in 2023, the savings due to the interest rate amounted to more than CZK 2,800, which is, however, again for the current value of the average new mortgage.
However, the current average mortgage amount is 11% higher than the average mortgage amount in 2024, which contributes to an increase in the monthly payment of CZK 2.2k. The mortgage payment of CZK 1 million with a 30-year maturity at current interest rates is around CZK 5.2 thousand at current interest rates.
Conversely, compared to the average 2.8% mortgage interest rate for new mortgages in 2019, the current refinance mortgage rate of 4.57% when the loan maturity is shortened raises the monthly repayments on an average mortgage by approximately more than CZK 1,800, or about 3.8% of the current gross average wage.
Table 2: Illustration of the average monthly mortgage payment by length of repayment and interest rate
Source.
|
Average size of a new mortgage in CZK: |
|
|
4 075 140 |
||||
|
Average interest rate in %: |
|
2,0 |
3,0 |
4,0 |
4,65 |
5,0 |
6,0 |
|
|
|
|
|
Monthly instalment: |
|||
|
Mortgage maturity in years: |
15 |
26 220 |
28 140 |
30 140 |
31 480 |
32 230 |
34 390 |
|
20 |
20 620 |
22 600 |
24 690 |
26 100 |
26 890 |
29 200 |
|
|
25 |
17 270 |
19 320 |
21 510 |
22 990 |
23 820 |
26 260 |
|
|
|
26,6 |
16 500 |
18 570 |
20 780 |
22 280 |
23 130 |
25 600 |
|
|
30 |
15 060 |
17 180 |
19 460 |
21 000 |
21 880 |
24 430 |
|
| |||||||
Note: the coloured column corresponds to the interest rate of the latest CBA Hypomonitor, other rates are illustrative; the coloured row corresponds to the average maturity of new mortgages according to CNB data; amounts are rounded to tens of crowns.
2 The table is available in the xls file attached on the CBA Hypomonitor website
Chart 3: Illustrative comparison of the average monthly mortgage payment with a year ago, depending on the interest rate, mortgage size and maturity in years
In the year-on-year comparison, the decrease in the mortgage rate resulted in a saving of CZK 1 070 in the average monthly payment, but the increase in the average mortgage amount caused an increase of CZK 2 650.
Source. Note: Amounts are rounded to tens of crowns.
Statistical annex
Note: These are actually new mortgages (i.e. refinancing and increases). The underlying data is available in the xls file attached on the CBA Hypomonitor website
Source.
Mortgage market in 2024: record growth of 83%
For the whole year 2024, banks and building societies granted new mortgage loans in the volume of CZK 228 billion. In addition, mortgages were refinanced to the tune of CZK 47 billion, bringing the total mortgage market to CZK 275 billion in 2024 from CZK 150 billion in 2023. If we adjust the volumes for the 4-8% increase in house prices (according to various statistics during Q1-Q3 2024), the volume of new mortgages grew slightly less in real terms. This corresponds to a more modest 53% year-on-year increase in the number of new mortgages in 2024 to almost 62,000 and a nearly 20% increase in the average amount of a new mortgage granted to CZK 3.7 million. Compared to the pre-pandemic years 2017-2019, the volume of new mortgages granted in 2024 was roughly less than a fifth higher.
Chart 2: Annual volume, number and average amount of mortgages granted between 2020 and 2024
Source.
CBA publishes summary statistics for the entire banking market
The Czech Banking Association, in cooperation with its member banks, publishes new aggregate statistics on the housing market. These are mainly the volumes and numbers of newly granted and refinanced mortgages and the respective interest rate. These statistics are published by the CBA in aggregate form for the entire banking sector on a regular basis around the middle of each month. All domestic banks and building societies providing mortgages in the Czech Republic participate in the survey. The data are available from January 2020 in the attached file on the website www.cbaonline.cz, where the relevant statistics can also be found separately for banks and building societies. The above figures are for the sector as a whole, which can also be viewed in a simple graphical form on the cbamonitor.cz website.
Methodology of the CBA Hypomonitor
The CBA Hypomonitor divides mortgage loans granted by banks and building societies to households into several categories in order to distinguish new loans from refinanced or internal refixations. New loans are then reported in categories according to the purpose of the loan:
1. new loans
These are loans whose full volume enters the economy for the first time. This category does not include loan consolidations or loan refinancing. It is divided into three categories:
- Purchase of real estate
- Property construction - including property renovation
- Other new arrangements - only new loans that are in no way related to the purchase or construction of the property, e.g. so-called American mortgages, settlement of a JVM, repayment of the purchase price, settlement of an inheritance share, settlement of a cooperative share, etc.
2. Refinanced loans from another financial institution
These are loans that have been originated by refinancing one or more loans from a financial institution other than the reporting one. Irrespective of the amount refinanced and regardless of the amount of any increase, the total amount of the newly originated loan is reported in this category.
3. Loans increased or internally refinanced
These are loans that were already part of the reporting entity's portfolio in the previous reporting period and have undergone one of the following changes during the reporting period:
- an increase in the agreed amount
- changes such that the original loan has been refinanced/converted into a new loan within the reporting entity. This is a genuinely new contract and not, for example, just a new arrangement in the context of a refixation of an existing contract. Therefore, the volume of such loans in the CBA statistics is lower than 'other new arrangements' in the Czech National Bank statistics.
The following banks and building societies provide data for the CBA Hypomonitor: Air Bank, Banka Creditas, Česká spořitelna, ČSOB, ČSOB Stavební spořitelna, Fio banka, Hypoteční banka, Komerční banka, mBank, Modrá pyramida, MONETA Money Bank, MONETA Stavební spořitelna, Oberbank, Raiffeisen stavební spořitelna, Raiffeisenbank, Stavební spořitelna České spořitelna, UniCredit Bank.