Recent data from the Czech Banking Association reveals a substantial surge in mortgage loans provided in November, witnessing an impressive 121% rise. Despite the increase, the average mortgage rate only experienced a marginal decrease to 5.67%, continuing a trend of incremental adjustments. The total value of loans issued by banks in November amounted to 16.2 billion crowns.

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

While the data indicates a robust growth in the mortgage market, it is noteworthy that the total volume of mortgage loans for the entire year is expected to be approximately a third lower than the pre-pandemic levels witnessed in 2017 and 2018. Furthermore, expectations of a significant drop in rates to four or even three percent over the next two years are deemed unrealistic.

Experts foresee a potential further drop in rates in the future, with Lucie Drásalová, an analyst at Sirius Finance, stating, “Next year, it is realistic that we would finish the year with rates around 4.5 percent.” However, Jakub Seidler, an economist from the Czech Banking Association, advises caution against excessive optimism until the rate decrease proves to be long-term.

In terms of specifics, the volume of newly provided mortgages without refinancing reached 13.4 billion crowns in November, indicating a 1.3% month-on-month increase from October. Simultaneously, the volume of refinanced loans slightly decreased to 2.8 billion crowns. The number of newly granted mortgages reached 4,166, marking a more than 90% increase compared to November of the previous year and representing the highest value since June the previous year.

Article by Prague Forum