Mortgage Volume Increases by 17 Percent

In May, banks and building societies provided mortgage loans worth 12.3 billion CZK, which is a 17 percent increase compared to April, according to statistics from the Czech Banking Association Hypomonitor. The volume and number of mortgages in May approached March levels and, after seasonal adjustments, was the highest since the middle of last year when the market began to freeze.

Although still significantly subdued compared to the past, the values of the last three months suggest that the mortgage market is slightly reviving. On a year-on-year basis, the volume of mortgages provided in May was 40 percent lower, similar to that in April.

“The situation is beginning to stabilize. We are monitoring declining real estate prices, which also persisted in May. There is still a reduced interest in large, less sustainable buildings and houses in remote locations. However, concerns about less accessible mortgages are slowly declining, and the mortgage market should gradually begin to recover, which will be slightly aided by the relaxation of rules by the Czech National Bank,” said Martin Vašek, CEO of Hypoteční banka.

The volume of newly provided mortgages without refinancing in May reached 10.4 billion CZK after April’s 8.8 billion CZK, a 19 percent increase compared to April. The importance of refinanced loans, internally or from another institution, was 2 billion CZK, compared to April’s 1.8 billion CZK.

The number of newly provided mortgages increased from 2900 to 3500 in May. In this regard, the May value, along with the March value, is at the highest level since July last year. However, it is still low compared to the average monthly number of new mortgages in the first half of last year, which was around 6000 and 9500 in the year before.

The increase in the number of mortgages and the volume of newly provided mortgages is a positive sign for the Czech real estate market, which has been hit hard by the COVID-19 pandemic. The relaxation of rules by the Czech National Bank will further boost the mortgage market, and the trend of declining real estate prices may attract more buyers, leading to a market revival.