The mortgage market in the Czech Republic experienced a decline in April, with a 16 percent decrease in the volume of mortgage loans provided compared to the previous month. This decline amounted to two billion Czech crowns, resulting in a total of 10.6 billion Czech crowns in April. Furthermore, the average mortgage interest rate saw a slight increase of three basis points, reaching 5.89 percent annually.

The decline in mortgage loans in April can be attributed to several factors. Firstly, after a particularly successful month in March, where banks and building societies granted mortgage loans amounting to 12.6 billion Czech crowns, representing a 60 percent increase compared to the previous month, April’s performance was less remarkable. The latest data from ČBA Hypomonitor indicates that the volume of agreed mortgage loans reached 10.6 billion Czech crowns.

When examining the types of mortgage loans, newly granted mortgages without refinancing experienced a decrease of 1.5 billion Czech crowns in April, with the volume amounting to 8.8 billion Czech crowns. On the other hand, the importance of refinanced loans, whether internally or from other institutions, reached 1.8 billion Czech crowns, which marked a decline of 0.5 billion Czech crowns compared to March.

In addition to the decline in volume, the total number of agreed mortgages in April also decreased by 814, with 3,691 mortgage agreements concluded. The number of newly granted mortgages dropped to 2.9 thousand, compared to nearly 3.5 thousand in March.

However, it is important to interpret the April figures in the context of historical trends. April tends to be weaker than March in terms of mortgage activity. Although the mortgage market has shown signs of recovery in recent months compared to the second half of the previous year, the monthly volumes of granted mortgages remain significantly lower, approximately half, compared to the period just before the pandemic.

Overall, while the decline in the mortgage market in April may seem concerning, it is important to consider the broader context and historical trends. The mortgage market in the Czech Republic has shown resilience and recovery in recent months, but it still has some way to go before reaching pre-pandemic levels. The slight increase in average mortgage interest rates may also be a factor influencing the decline in mortgage loan volumes. Continued monitoring of the market will provide a clearer picture of its trajectory and potential future trends.

Article by Prague Forum