New mortgages in October reached 30.3 billion crowns. It is only slightly more than in September, when the volume was 29.5 billion crowns. While banks provided mortgages for 24.9 billion crowns, building societies for 5.43 billion. The year-on-year growth rate of new loans thus remains strong, reaching almost 50 percent in October.
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“Although rising interest rates in the market are likely to dampen demand for mortgage loans, in the short term, fears of rising interest rates and tightening conditions for the CNB to provide mortgages may force some households to speed up their mortgage applications. The volumes of mortgages provided may thus remain high in the coming months, despite rising interest rates, “said CBA analyst Jakub Seidler.
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According to CNB statistics, the APR (average annual percentage rate of charge) was 2.61 percent for mortgage loans in October and increased by one tenth of a percentage point compared to the previous month. The interest rate rose from 2.37 to 2.48 percent. The rise in interest rates thus continues at a similar pace as in previous months, despite the fact that the central bank has significantly accelerated the rise in its key interest rates.
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According to Seidler, the slower growth of mortgage rates is related to the fact that contracts are gradually being concluded, which banks have begun to negotiate with clients in previous months with an even more favorable interest rate.
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Rates will rise
Interest rates are slightly lower for refinanced loans, which slightly reduces the overall average interest rate. The interest rate for truly new mortgages was 2.54 percent in October, as indicated by the previously published CBA Hypomonitor, which provides information on the numbers, volumes and average interest rates of newly provided mortgages in a more detailed breakdown.
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“In the coming months, the average realized rate will start to grow faster, as new mortgages will already reflect the current market situation. Market interest rates with longer maturities are now the highest in a decade, at which time the average mortgage rate was around four percent. It can thus be assumed that mortgage rates will gradually approach this value at the beginning of next year, “Seidler estimated.
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