Czech Banks Witness A Quarter Drop In Mortgage Loans

Last year, Czech banks and building societies provided mortgage loans worth 150 billion crowns, marking a nearly quarter drop year-on-year. New loans, excluding refinancing, amounted to 124 billion crowns. Interest rates declined in December, dropping from 5.67 in November to 5.65 percent, the lowest value since mid-2022.

This information is derived from the statistics of the Czech Banking Association Hypomonitor, with data supplied by all banks and building societies providing mortgages in the Czech market. “From the pe”spective of original expectations at the beginning of 2023, reality turned out to be relatively favorable, and the volume of mortgages provided reached the upper limit of estimates,” said Jakub”Seidler, the association’s chief economist.

The decrease in loan provision was attributed to a combination of factors, from the relaxation of income indicator rules by the Czech National Bank (CNB) to a slight drop in property prices and a slight decrease in rates. The mortgage market is expected to revive this year, and double-digit growth can be anticipated for the year. However, it is still unlikely to reach pre-pandemic levels.

The volume of mortgages provided in December fell by seven percent month-on-month to 15.1 billion crowns. Year-on-year, it increased by 93 percent. In December, the volume of indeed newly provided mortgages without refinancing was 12.7 billion crowns after 13.4 billion crowns in November.

“The year 2024 will be about”the decline in interest rates and the market revival. This rate decline trend began at the end of 2023 and is induced by the gradual drop in the price of resources. The market environment is also taking effect,” pointed out Marek Richter, Head o” Mortgage Services at Air Bank.

Despite this development, mortgage rates remain above average in the last two decades and are at similar levels as in 2008 and 2009. The average mortgage in December increased from 3.21 million to 3.37 million crowns, which is a return to the levels from the beginning of 2022. The highest was in November 2021, which amounted to 3.46 million crowns.