ČBA: Mortgage volume fell by a quarter in January

Banks granted mortgage loans worth CZK 32.6 billion in January, a drop of more than a quarter. This is according to statistics from the Czech Banking Association (ČBA) Hypomonitor. According to the association, the month-on-month drop of almost CZK 12 billion goes well beyond the normal January slowdown.

The number of mortgages granted followed the same pattern, falling by 28% to 10,000 in January compared to the previous month. This is the lowest number of mortgage originations since August 2020.

The volume of actual new mortgages originated in January fell from 34.2 billion to 26.3 billion, while the volume of refinanced loans fell from 10 to 6.3 billion. The number of new mortgage originations fell month-on-month from 9,900 to 7,700.

Year on year, the volume of mortgages fell by one percent in January and the number of mortgages by 11 percent. This is mainly due to a year-on-year drop in refinanced loans, while actual new loans grew double-digit in January. However, the momentum also slowed significantly compared to previous months.

The interest rate on truly new mortgage loans rose to 3.4 percent in January from December’s 3 percent. The rise in rates thus continued to accelerate and was in January the fastest since the middle of last year, when the Czech National Bank started raising rates. The average mortgage rate thus reached its highest level in January since the turn of 2012 and 2013.

According to official ČNB  data, the average rate for new mortgages at the time was around 5.5 percent. Mortgage rates should thus gradually move towards this level this year. However, the specific rate will depend on the individual parameters of the mortgage, i.e., the length of the fixation or the size of the borrower’s resources.