Home » Technology » Despite the coronavirus crisis, the mortgage market is breaking records. Interest rates continue to fall

Despite the coronavirus crisis, the mortgage market is breaking records. Interest rates continue to fall

July became the strongest seventh month in the history of Fincentrum Hypoindex with the volume of mortgages provided for 21.6 billion crowns. Interest rates continue to fall, with some banks lowering them even below 2%.

According to the hypoindex, the average interest rate on mortgage loans fell by six basis points to 2.15 percent in July. The pace of decline slowed slightly compared to May and June.

“The current average interest rate is reaching the level of November 2017. In my opinion, there is no relevant reason for the trend to reverse in the foreseeable future,” said Jiří Sýkora, a specialist analyst at Fincentrum & Swiss Life Select.

In July this year, banks provided mortgages in the total amount of CZK 21.597 billion. This July became the strongest seventh month in the history of the Fincentrum Hypoindex indicator, which has been monitoring market developments since 2003. The volume of mortgages provided increased by more than six billion crowns year-on-year and by more than 650 million crowns compared to June.

As well as volumes, the number of mortgages provided grew in July. Banks have negotiated 7867 mortgages, which is 1,252 more mortgages year-on-year and 246 more mortgages than in June this year.

A record year of 2020?

From January to July, banks paid out mortgages for more than 131 billion crowns. The last time the banks managed to do this was in 2017. The record is still held in 2016, when the banks provided mortgages for 225.809 billion for the whole year. At that time, people took out loans worth 30 billion in November alone, for fear of a new law on consumer credit.

“If the mortgage market is not out of breath, there is a chance that this year will attack record volumes from 2016 and 2017. However, given the not very favorable predictions from the beginning of the year and the coronavirus pandemic, it would be a great success for banks if the volume of mortgages provided exceeds 200 billion crowns, “said Jiří Sýkora.

The average mortgage amount reached 2,745,277 crowns in July, which is less than in previous months, but only by a few thousand. According to Sýkora, the decline in the average mortgage may indicate that real estate prices are falling, but it is still too early to draw conclusions.

Rates even below the 2% limit

According to the analyst, the optimistic results of the mortgage market are due to ever-falling interest rates. Although the decline in the average interest rate is slowing down, there are still banks that repeatedly cut rates below the 2% threshold.

At the end of July, for example, Fio banka did so, offering new mortgages with a fixed term of 1.48 percent for one year, 1.58 percent for three years and 1.68 percent for five years. Only mBank is cheaper for five-year fixations, where it is possible to arrange a mortgage from 1.64 percent.

In July, Creditas Bank also decided to reduce mortgage rates below two percent, namely a three-year fixation to 1.89 percent and a five-year fixation to 1.99 percent. So far, Sberbank has lowered mortgage interest rates below two percent. With effect from August 10, it is thus possible to obtain a mortgage with a fixation for five, seven and ten years from 1.79 percent.

However, according to the mortgage market expert Veronika Hegrová from the Hyponamíru.cz website, the prudence of banks towards clients’ income continues due to coronavirus.

“There are still lists of professions for which banks do not currently approve mortgages. However, there are the first swallows when certain types of income become recognizable, especially income from abroad in connection with the reopening of borders and the list of” green “countries. Other income has shifted from categories not accepted into the category of individually assessed, “says Hegrová.

According to her, the value of real estate is also assessed more strictly, banks pay great attention to the real estate market and the possible decline in real estate prices.

Number (in pcs) Volume (in billions of CZK) Interest rate
Month year 2019 2020 2019 2020 2019 2020
members 4764 6 491 10,93 16,88 3,00 % 2,36 %
February 4961 7 092 10,881 18,59 2,99 % 2,42 %
March 6658 5 503 14,746 13,84 2,9 % 2,45 %
April 6395 6 744 14,615 17,85 2,85 % 2,39 %
May 6977 6 203 15,927 16,49 2,8 % 2,3 %
June 7119 7 621 16,498 20,95 2,76% 2,21 %
July 6615 7 867 15,435 21,6 2,68 % 2,15 %
August 6153 14,294 2,61 %
September 6359 15,007 2,47 %
October 7027 16,953 2,36 %
November 7305 18,301 2,35 %
December 7074 17,996 2,34 %

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