More than a fifth of Czechs now have a mortgage, ie almost 700,000 households. However, these numbers will continue to grow due to the extreme interest in housing loans this year. The Czech Banking Association has monitored why people take out mortgages, in what amount most often and according to what they orient themselves in bank offers.
“Czechs want their own housing. At the same time, they are conservative and consider real estate investments to be safe and secured in old age,” explains Vladimír Staňura, a consultant to the Czech Banking Association.
According to him, in the group of people between the ages of 18 and 49, about 400,000 people are now considering a loan. This age group is one of the most frequent applicants.
A survey of more than a thousand respondents confirmed that people take out a loan to buy their own apartment or house. A large part then bought or plans to buy a mortgage due to the reconstruction of existing housing. Furthermore, the Czechs take out a mortgage to buy land, where they want to build. Some applicants are in debt for the purchase of an apartment for children and part for the purchase of an apartment as an investment, which they want to earn in the form of rent.
The amount of the mortgage most often ranges from one to two million crowns. 36 percent of respondents have such a debt. Loans up to one million crowns are more common, especially for people over the age of 50, and are used primarily to renovate existing housing. Higher amounts are borrowed more by young people. According to the latest Hypoindex, which has been monitoring the development of mortgages on the market for a long time, the average loan amount exceeded 2.8 million crowns in September.
The duration of the negotiated mortgage also increases with the average amount. “This is quite logical, because those who take a higher amount will spread the installments over a longer period of time so as not to burden their monthly family budget. More than half of people have a mortgage for 25 to 30 years, 17 percent of people pay a loan of 20 to 24 In addition to the amount of the mortgage, the repayment period is logically also influenced by the age of the applicants. Older people have a shorter period, while people under the age of 40 sign up for more than 20 years, “adds Staňura.
We compare offers ourselves, we don’t need a consultant, say young people
In terms of how to collect a mortgage, the survey showed significant differences between those who have a mortgage and those who are just planning to do so. “The recommendation of a financial advisor was often followed by people who already have a mortgage. In the past, it was common to leave the choice to an expert. There is a difference of generations, “says a consultant to the banking association.
According to him, today’s candidates give more to their own judgment. They have access to more informed information, especially on the Internet, which the younger generation can work with better.
When choosing a property, the price is important for 32 percent of Czechs, and the size is important for 18 percent of buyers. According to Vladimír Staňura, however, the whole selection, without us fully aware of it, depends on the location of the property – part of the Czech Republic, location in the center or on the outskirts of the city, transport accessibility.
Each bank examines the applicant’s ability to repay the loan. This verification and assessment of creditworthiness is rated by 70 percent of respondents as strict but correct. The banks also follow the recommendations of the Czech National Bank, which amended them in connection with the first wave of coronavirus. From April this year, the conditions for obtaining a mortgage are easier. Nevertheless, applicants must, among other things, cover at least one tenth of the price of the property from their own resources.
“A quarter of respondents declared that they had to save more than half a million crowns before applying for a mortgage,” comments Vladimír Staňura on other issues of the survey.
The main source of this money is the vast majority of their own savings. 75 percent of people said that. The savings from building savings are in the pipeline, which were used by 40 percent of people. Savings on current and savings accounts are mainly used by younger applicants. Older people will mainly use savings from supplementary pension insurance or building savings. Less than a fifth of applicants borrowed with their families, and eight percent of people had to sell something to get the necessary share of the property price.
The vast majority of people arrange mortgages in person at a bank branch. However, according to Staňura abroad, it is increasingly common to arrange a housing loan via the Internet. According to him, this method will become more popular in our country as well.
According to the survey, young men with higher education and above-average incomes would rather arrange a mortgage via the Internet. Older people generally prefer personal contact. “Although some banks already offer mortgages over the Internet, the negotiation in this context must be seen as an agreement of terms, not a conclusion. Especially in relation to documents intended for the real estate cadastre, a physically verified signature of the applicant is required,” Staňura added.