The volume of mortgages fell by 16 percent in January, and rates fell slightly after two years

The volume of mortgages fell by 16 percent in January, and rates fell slightly after two years

Mortgage volume fell 16 percent in January, rates down slightly after two years

Czech money, banknotes, crown, house, mortgage, rent, building savings – illustration photo.

Prague – Banks and building societies provided mortgage loans for CZK 6.5 billion in January, which is a 16 percent decrease compared to December. The interest rate for truly new mortgages without refinancing fell slightly for the first time in two years, from 5.98 to 5.93 percent. This follows from the statistics of the Czech Banking Association Hypomonitor. All banks and building societies providing mortgages on the Czech market supply data to it.

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“The volume of mortgages granted in January was the lowest since February 2014, but in general, the last months have been more at the levels that were common ten years ago. In terms of the number of mortgages granted, the market reached the lowest values ​​in the last 20 years. The mortgage market is so remains frozen and its double-digit decline will continue this year as well,” said ČBA Chief Economist Jakub Seidler.

The volume of actually newly granted mortgages without refinancing reached CZK 5.4 billion in January, after December's CZK 6.6 billion . This is the lowest value since January 2014. The volume of refinanced loans amounted to CZK 1.15 billion, similar to December. The volume of actually newly granted mortgages fell by 18.7 percent month-on-month, and the year-on-year drop remained the same as in December at 80 percent.< /p>

“Although December of last year brought some hopes that the mortgage market is experiencing a slight recovery, the January numbers were rather disappointing for us. The mortgage market thus remains depressed and the year-on-year drop remains at a significant 80 percent. And this despite the fact that activity on the mortgage market started to slow down last year and we are no longer compared to the extraordinary year 2021 in a year-on-year perspective,” said Jiří Zita, head of Fio bank's mortgage department.

While in December banks provided 2,300 truly new mortgages, in January it was 400 fewer. This is a lower value than in September last year, when the number of newly granted mortgages only slightly exceeded the 2,000 mark. At the same time, the average monthly number of new mortgages was around 6,000 in the first half of last year, while the year before last it even reached 9,500.

With the rise in domestic interest rates, last year banks began to record an increased interest of clients in euro mortgages, which, however, are intended only for applicants with a constant and sustainable income in euros. “However, for such clients, the mentioned option may still be attractive despite the fact that the difference between the koruna and euro mortgage rates is gradually decreasing,” pointed out Filip Vavruška, director of the business area of ​​Oberbank AG, Czech branch.

The interest rate is now slightly above the value from October last year, but it is still at the highest levels in the last 20 years, although it also hovered at similarly high values ​​in 2008 and 2009. At the same time, so-called realized interest rates, in contrast to bid prices, reflect the actual real interest rate at of signed mortgage contracts. Offer rates most often range in a relatively wide range between six and seven percent, but their average has stagnated slightly above six percent in the last six months.

The average mortgage fell to CZK 2.83 million in January , which is the lowest value since September 2020. With stricter rules from the CNB and high interest rates increasing monthly installments, some households had to and reduce the intended mortgage.