CZECH REPUBLIC Trends and Developments Contributed by: Tomáš Sedláček, Zdeněk Husták, Adam Nečas and Mikuláš Zacpal, BBH, advokátní kancelář, s.r.o.
Trends in the Mortgage Market The mortgage market in the Czech Republic has been developing dynamically in recent years, and 2025 will be no exception. Even though inter - est rates are higher than they were a few years ago, buyers are realising that property prices are now unlikely to fall any further and the number of mortgages is growing significantly. Changes in interest rates, short-term fixed-rate mortgages, and legislative developments are influencing both client behaviour and bank offerings. Another trend recently observed in the mortgage market is the popularity of shorter fixed-rate periods, especially three-year terms. According to data from the CNB, in July 2024, up to 89% of all new home mortgages were secured with a maximum three-year fixed interest rate. How - ever, experts warn that this approach carries some risk due to the uncertain future trajectory of interest rates. The main reason clients opt for shorter term fixed rates is generally their hope that better refinancing terms will be available after a few years. The recent amendment to the Consumer Credit Act introduces a fee of up to 1% on the early repayment of mortgage loans. This legislative change is intended to compensate the banks for administrative costs and the total interest they lose when a loan is repaid before the end of the fixed-rate period, offset by the interest the bank could potentially earn by issuing a similar loan. The amendment will most likely impact the mort - gage refinancing market, potentially extending the period that clients will remain with their origi - nal lenders. The Shift Towards Modern Payment Methods With increasing digitalisation, more people use innovative payment methods. These provide simplicity, convenience, and speed, along with
improved security. Czechs are among the Euro - pean leaders in contactless transactions. In the past year, several innovative solutions have entered the market, assisting both customers and merchants in accepting cashless payments. Air Bank’s service called “Cvak” (which means “Click” in English) is a significant innovation mak - ing cashless payment acceptance more afford - able and accessible for entrepreneurs. It allows merchants to accept payments via a mobile app and an NFC card, eliminating the need for a traditional payment terminal and significantly reducing the costs associated with acquiring and operating one. It uses A2A instant payments if the customer has an account with one of the co- operating banks. This scenario does not include traditional card associations, thus saving further costs. The Cvak service is available to any mer - chant, regardless of their bank. They only need the Cvak app on their phone and a physical NFC card, which they receive free by mail. This service is also open for other Czech banks to join. Since smaller merchants often prefer cash payments due to the high fees associated with cashless transactions, this service could con - tribute to better access to cashless payments and ease the financial burden of operating them. In October, Apple’s Tap-to-Pay technology expanded to the Czech Republic. It allows mer - chants to turn their iPhones into contactless pay - ment terminals. Customers simply tap their con - tactless card or Apple device to the merchant’s iPhone, which accepts the payment using its NFC chip. This option provides merchants with another way to accept cashless payments, and is increasing the accessibility of this technology. This also puts further pressure on reducing the fees that vendors pay to service providers on each transaction.
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