Surge in Mortgage Loans: November Sees a 121% Increase

Fresh data from the Czech Banking Association shows a significant increase in provided mortgage loans in November, with a notable 121% rise. Banks issued loans worth 16.2 billion crowns, even as the average mortgage rate only slightly decreased to 5.67%. This decline continues a trend of cosmetic adjustments, with the monthly average rate dropping by only 0.04 percentage points.

“The worst period on the mortgage market for the last few years is behind us,” says Ondřej Šuchman, a mortgage manager at Komerční banka. The volume of newly granted loans more than doubled compared to the previous year. The average mortgage amount in November was 3.21 million crowns.

Experts predict a further drop in rates in the future. “Next year, it is realistic that we would finish the year with rates around 4.5 percent,” says Lucie Drásalová, an analyst at Sirius Finance. However, economist Jakub Seidler from the Czech Banking Association cautions against too much optimism until the rate decrease is long-term.

Despite the evident growth of the mortgage market, it is clear that the total volume of mortgage loans provided this year will still be approximately a third lower than what was usual in the pre-pandemic years of 2017 and 2018. Moreover, it is unrealistic that rates would drop to four or even three percent over the next two years.

The volume of newly provided mortgages without refinancing reached 13.4 billion crowns in November, following 13.2 billion in October, a month-on-month increase of 1.3%. The volume of refinanced loans was 2.8 billion crowns, slightly down from 2.9 billion a month earlier. The number of newly granted mortgages reached 4,166, a more than 90% increase compared to last November, marking the highest value since June last year.