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Forecast of interest rates until the end of 2023 and outlook for 2024

Issued 25.09.2023

What are the expected mortgage interest rates for the rest of this year? Is it worth waiting to buy a property for more favorable rates in 2024? And what decline in interest rates can be expected?

The above-mentioned questions are among the most frequent that we encounter these days when consulting with our clients. Let's take a look at the most common scenario for the forecast of interest rates according to leading Czech analysts.

Interest rates until the end of 2023
Mortgage interest rates are slowly falling, and this trend can be expected as autumn approaches and for the rest of this year. However, let's not expect any miraculous reduction, but rather a creeping reduction by tenths of a percent. Current rates are most often in the range of 5.39%-5.89% and we can expect to see below the 5% threshold by the end of the year, but rather only cosmetically at 4.99%.

Interest rate outlook for 2024
Next year, the Czech National Bank is expected to lower interest rates, which will eventually translate into a reduction in banks' interest rates. Initially, one can expect a continuation of the gradual reduction of rates and increasingly frequent offers below the 5% level. The pace of interest rate cuts will depend mainly on the inflation in the Czech Republic and on the subsequent reduction of interest rates by the Czech National Bank. The most common expectation is that rates will be in the 4.50%-5.00% range. Only time will tell if, for example, an interest rate of 4.49% will be the lowest that next year will bring.

In the event of a faster fall in inflation, there may also be a significant reduction in interest rates, and mortgage rates may drop to the 4.00%-4.50% band, and they will most likely not go lower.

Of course, as always with similar predictions, the above is only the most frequently discussed scenario from today's point of view. Any unexpected development in the markets, from the point of view of inflation or the development of the economy, can have a significant impact on these predictions and completely reverse this trend, both by a significant reduction in interest rates and also by increasing them again above the level of 6%. Although this scenario is less likely, it is good to remember that interest rates can always go down as well as up.

It may not be worthwhile to wait until next year to buy real estate, because in the event of a drop in interest rates, this will significantly revive the demand for mortgage loans and increased interest will push real estate prices higher again. Any speculation in this direction may not pay off and we do not recommend it either.

Our mortgage specialists, whom you can contact by filling out a short questionnaire, will be happy to help you with the appropriate setting of the interest rate fixation and the entire mortgage loan.

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