In June, banks and building societies in the Czech Republic granted mortgages worth CZK 24.2 billions, the highest value since March 2022, an increase of 2% compared to May and 73% year-on-year.
Jakub Seidler, chief economist of the Czech Banking Association, said that a similar volume of mortgages was granted in the first half of the year as in the first half of 2020, albeit by a quarter less. The latest data on the mortgage market confirms its gradual recovery, and in recent months the volume of new mortgages is among the highest in the past two years. According to statistics from the Czech Banking Association’s Hypomonitor, interest rates on new loans fell slightly to 5.06% from 5.07% in May.
The volume of new loans actually granted, excluding refinancing, reached CZK 20.2 billions in June, up 0.6% from the previous month. The volume of loans refinanced, that is, internally or by another institution, amounted to CZK 4 billions, up from CZK 3.6 billions in May. The number of new mortgages granted reached 5,403, making it the second highest level this year, along with May’s highest level since March 2022. The average mortgage continued to rise in June, from CZK 3.63 millions to CZK 3.74 millions. Since April, the average mortgage has thus surpassed the previous record level of CZK 3.46 millions set in November 2021.
A one percentage point increase in mortgage rates means an increase in monthly repayments of approximately CZK 1,500-2,000 for an average mortgage. Compared to the 2% interest rate that was common on the market in previous years, the current mortgage rate implies an increase in the monthly payment for an average mortgage by about CZK 6,000. Currently, the monthly repayment for a CZK 1 million mortgage with a 30-year term is about CZK 5,500. According to the association that monitors interest rates on new mortgages, rates have not really decreased significantly. This is caused by market interest rates that have been rising since mid-March and have remained high, albeit unstable.
Michael Pupala, managing director of Modrá pyramida stavební spořitelna, stated in a statement that the gradual reduction of rates by the central bank was most evident in the fall of interest rates on mortgages with short-term fixation. This currently allows customers to take advantage of one- to three-year fixings and respond flexibly to new conditions in the medium term. The decline in rates on longer fixings will not be as rapid this year, partly due to uncertainty about the further development of inflation.
Jana Vaisová, a mortgage specialist at FinGO, said she is seeing more interest from customers in terminating their existing mortgages before the amendment to the Consumer Credit Act comes into force in September. After that date, new customers or customers with new contracts will be subject to early exit penalties. According to Petr Klymec, director of Kousek Bytu, the main impetus for the recovery of the real estate market, and thus of mortgages, is the drop in interest rates on bank deposits.
Daniel Horňák, analyst at Bidli, said that although the CNB lowered the base interest rate, rates for end customers remained virtually unchanged. However, a significant recovery is evident for several months in a row. Customers have already realised that the fall in interest rates has practically stopped and that another reduction is difficult.
Source: https://www.patria.cz/zpravodajstvi/5979097/banky-poskytly-v-cervnu-hypoteky-za-242-mld-kc-nejvice-od-brezna-2022.html https://www.ceskenoviny.cz/zpravy/banky-poskytly-v-cervnu-hypoteky-za-242-mld-kc-nejvice-od-brezna-2022/2542658
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