Average mortgage rate in July rose slightly to 2.5 per cent

The average mortgage rate rose marginally to 2.5 per cent in July, according to data compiled by the Fincentrum Hypoindex, whose figures are based on the real values of freshly agreed contracts, including refinancing. Last month the average rate stood at 2.49 per cent.

About 2,000 fewer mortgage contracts were signed in July while the volume of mortgages fell month-on-month by almost 4 billion crowns to 15.5 billion crowns, according to Fincentrum.

Analysts quoted by the state news agency said the dip was partly a seasonal phenomenon, but mainly potential buyers are hoping that real estate prices have peaked and waiting for the market bubble to burst. But a further cooling can be expected, with stricter central bank guidelines rules on mortgages due to come into effect from October 1.

At its last policy-setting meeting in early August, the Czech National Bank raised the key interest rate by 25 basis points to 1.25 per cent. It was the third hike in interest rates since the end of the bank’s forex interventions against the crown. Bank governor Jiří Rusnok has not ruled out further increases this year.