Banks and building societies have provided mortgage loans for more than CZK 32 billion (€1.2 billion) within August, reports the Czech Banking Association in its newest Hypomonitor. Compared to July, mortgage activity has increased by a third.
August activity on the mortgage market is usually stronger. Taking this into account, this year's August month-on-month increase shows a double-digit. In year-on-year terms, growth accelerated from July's 109% to 130%. The volume of mortgages granted in August was the highest since January 2022, which illustrates the continued recovery of the mortgage market, despite the amendment to the law regulating the conditions for early repayment of a mortgage loan.
The average mortgage rate for new loans fell below 5% for the first time in more than two years and amounted to 4.98% after 5.07% in July. Interest rates contrary to bid prices, reflect the actual real interest rate for signed mortgage contracts. The average mortgage further increased to CZK 3.95 million (€157,000). The mortgage amount is also related to the development of real estate prices, which were almost 10% higher in Q1 2024 than in Q4 2021, and continued to grow in the 2nd quarter. The volume of mortgages granted in August was the strongest this year and at the same time the strongest since January 2022. From January to August, the volume of mortgages granted almost doubled year-on-year.
The volume of actually newly granted mortgages without refinancing reached CZK 25.7 billion (€1.021 billion) in August. The volume thus increased month-on-month by 31%. The number of newly granted mortgages reached 6,498, 25% month-on-month growth and the highest value since March 2022. The share of refinanced loans in the total volume of mortgages granted increased from 17.4% in July to 20.7%, which is also the effect of changes in conditions of early repayment effective from September this year.
"Currently, we can see the recovery of the mortgage market, although the rates are not falling as fast as on savings accounts. A dramatic drop in rates cannot be expected even at the end of the year. One of the reasons may be that some processors are already announcing the extension of approval periods given the overpressure of loan applications and their real capacities," says Michal Noha, Director of Product Management at Raiffeisen stavební spořitelna.
"Recent developments in market rates for longer maturities once again open the door for future reductions in mortgage rates, as rates have reached their lowest levels this year and at the same time are the lowest since the end of 2021. Mortgage rates always respond to these developments with a delay of several months. If the developments will not reverse on the market, another slight decrease in mortgage rates should continue in the coming months," says Jakub Seidler, Chief Economist at the Czech Banking Association.
