Translated by Milo Dvorak
17. 6. 2024
Business Newsletter #43
Good morning,
Today's newsletter may seem to be a mere summary of the current mortgage situation in the Czech market, but it actually contains a number of expressions used in a very typical context that can be applied elsewhere.
Published by ct24.ceskatelevize.cz on 13 June 2024
Banks and building societies in the Czech Republic provided mortgage loans worth CZK 23.7 billion in May. This represents an eight per cent increase from April and a 92 per cent increase year-on-year. The interest rates on new loans fell to 5.07 per cent from 5.1 per cent in April, the lowest rate since June 2022. This information is based on statistics from the Czech Banking Association's Hypomonitor. The data is supplied by all banks and building societies providing mortgages in the Czech market.
However, the rate of month-on-month decline in interest rates has slowed compared to previous months. This trend is attributed to fluctuating market interest rates, however, it began rising again in mid-March, according to the association.
The volume of genuinely new mortgages, excluding refinancing, reached CZK 20.1 billion in May, surpassing the CZK 20 billion threshold for the first time since March 2022. In April, it was CZK 18.8 billion. The volume of refinanced loans, internally or from different institutions, was CZK 3.6 billion. The share of refinanced loans in the total volume of mortgages provided in May was 15.1 per cent. The average for this year is 15.7 per cent. The number of newly provided mortgages reached 5,543, the highest figure since March 2022.
"May and April's figures confirm a solid recovery of the mortgage market. In terms of the volume of mortgages provided, we are now above the levels of 2020 after almost two years. If this trend continues, the volume of mortgages provided this year could roughly match the 2020 level; the second strongest year in this regard, just after the record year of 2021," said the Chief Economist of the Czech Banking Association, Jakub Seidler.
The average mortgage amount continued to grow in April, from CZK 3.6 million to CZK 3.63 million, reaching a new maximum. According to the association, the gradual decline in mortgage rates or the relaxation of limits by the Czech National Bank enables access to higher mortgages.
An increase in mortgage rates by one percentage point means an increase in the monthly payment of an average mortgage by approximately CZK 1,500 to CZK 2,000. Compared to the standard two per cent interest rate seen in previous years, the current mortgage rate has increased the monthly payment of an average mortgage by roughly CZK 6,000. The monthly payment for a CZK one million mortgage with a thirty-year term at current interest rates is around CZK 5,500.