Mortgage Market Strengthens in March

In March, the volume of mortgages provided increased by 60% month-on-month. Along with the number of mortgage loans arranged, it reached its highest level since the mid-last year when the market began to cool significantly. The average mortgage rate for newly provided mortgages has also fallen for the third consecutive month. These are the current data from ČBA Hypomonitor.

Banks and building societies arranged mortgages totaling CZK 12.6bn in the previous month, an increase of CZK 4.7bn compared to February. This represents a 60% month-on-month increase. The year-on-year decline in mortgages provided was thus reduced to 59% in March from February’s 69%.

“After several weaker months at the beginning of this year, we saw growing demand for loans in March, especially in financing energy-saving solutions. We expect this factor to play an important role in household loans for the rest of this year,” said Pavel Čejka, chairman of the board of Raiffeisen stavební spořitelny.

Banks provided new mortgages without refinancing in March for CZK 10.3bn, CZK 3.7bn more than in February. The volume of refinanced loans (internally or from another institution) was CZK 2.3bn (CZK 1.3bn in February).

The number of new mortgages in March was 3,485, while in February, there were 2,289

“The mortgage market saw a significant revival in March. Many households concluded that the high-rate environment would last longer with us and that it would not pay to wait for a significant reduction in mortgage rates. Gradually falling property prices could also have brought some impetus, as they continued to decline slightly in March, according to data from the Land Registry, and are already more than twenty percent lower in some regions compared to the peak in the middle of last year,” added Jakub Seidler, chief economist of the Czech Banking Association.

The interest rate for newly provided mortgages reached 5.86% in March. This is a four basis point drop from the February figure. The rate has been declining for three consecutive months. Its value is, therefore, the lowest since October last year.