At its meeting on Wednesday, the CNB Bank Board is likely to leave the base interest rate unchanged again. For the mortgage market, given the likely peak in inflation that has ravaged the Czech economy this year, this could mean a period of stability in interest rates, and now with a view to a gradual reduction.
The price of new flats will also remain stable in the future. However, rents are still rising significantly, having jumped by 20-30% year-on-year in Prague and are still rising. If rents were to rise by an average of only 10% per year over the next two years, new flats would maintain their current prices and mortgage interest rates are expected to gradually fall to 3%, mortgage repayments will be on average similar to, or even lower than, rents. For example, for a Prague apartment with the most popular layout of 2+kk, the tenant would pay CZK 28,500 per month for two years, while the owner would pay CZK 27,200 on the mortgage payment (LTV 80).
People who this year had to choose renting instead of buying their own flat due to expensive and difficult to obtain mortgages, can thus see the light at the end of the tunnel, when they will be able to pay off their dream home for a similar or even lower price than the rent.
Source: CENTRAL GROUP
