Banks raise mortgage rates again — monthly payment up nearly 1,300 crowns

Czech banks continue to push mortgage rates higher: just as in July, several lenders raised their rates again in August by 0.2–0.4 percentage points. According to Jiří Sýkora, mortgage analyst at Swiss Life Select, "there is now fairly limited room for a broad-based drop in prices."

For a model mortgage of 3.5 million crowns with a 25-year repayment period, the monthly payment at the average September rate came to roughly 21,520 crowns. Since March, when banks started raising rates, the payment has climbed by 1,280 crowns a month.

Why mortgages keep getting pricier

The main driver behind the increase is rising interest rate swaps — essentially the price at which banks lend money to one another. Swaps are climbing on renewed fears of higher inflation, fuelled by the escalating conflict between the US and Iran and the resulting jump in oil prices.

It's the Middle East conflict that will continue to shape where mortgage rates go from here. "Over a six-month horizon, I'd expect stagnation or a slight increase rather than anything else," said Tom Kadeřábek, head of the product department at Swiss Life Select.

Any chance of a discount?

Experts advise bank clients to try negotiating a better deal. Come autumn, lenders traditionally step up their competition for customers. If that battle plays out again this year, Sýkora believes interesting individual offers could emerge on the market. But if banks' own costs stay high, borrowers shouldn't count on any meaningful breaks.

Around Prague, based on reporting by novinky.cz