The Czech mortgage market has experienced a significant slowdown, with banks and building societies providing mortgages worth 24.2 billion crowns in September, of which new loans accounted for just under 20 billion. This represents a quarter drop compared to August, as banks continue to be cautious about reducing mortgage rates.
According to the Czech Banking Association’s Hypomonitor, the average mortgage rate for new loans in September only marginally decreased to 4.96% from August’s 4.98%. Despite the Czech National Bank governor Aleš Michl suggesting that banks have room for more substantial rate reductions, financial institutions appear to be prioritizing high margins and profitability.
The volume of mortgages provided saw a month-on-month decrease of 8.1 billion crowns, following an increase of 8.6 billion in August. The Czech Banking Association attributes August’s surge to households rushing to finalize contracts before the implementation of an amendment tightening conditions for early mortgage repayment.
In September, banks issued 5,232 new mortgages, a 20% decrease from the previous month. The volume of refinanced loans also declined. The main topic of discussion remains high mortgage rates, with the Czech National Bank’s base rate at 4.25%. Banks argue that mortgage interest rates react with a delay of several months to changes in long-term market interest rates.
The Czech Banking Association notes that long-term market interest rates have been notably volatile recently, reacting largely to market expectations associated with the development of US Federal Reserve rates. Since the end of September, these rates have begun to rise slightly again.