According to the Fincentrum Hypoindex indicator, this time it decreased by four basis points to 1.98 percent. It thus broke the two percent mark, which was last below the last time in March 2017.
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The record amounts that Czechs borrowed for housing this year are largely due to the rapid rise in real estate prices, which did not stop even during the coronary crisis. In November, banks provided mortgages in the amount of 26.9 billion crowns, making it the second most successful month in history. The first was also November, four years earlier, when the volume of mortgages provided reached a total of 29.7 billion crowns.
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Will the limit of 250 billion crowns fall?
From January to November this year, the volume of agreed mortgage loans reached CZK 224.507 billion. Only 1.3 billion crowns remain to break the record from 2016, when banks provided mortgages in the amount of 225.8 billion crowns for the whole year. According to analysts, it is so clear that the absolute record will fall, according to some, the limit of 250 billion will be broken.
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The record amounts that Czechs borrowed for housing this year are largely due to the rapid rise in real estate prices
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In November, a total of 9323 clients came to the bank for a mortgage, 523 more than in October. In year-on-year comparison, it was two thousand more. On the other hand, the record November 2016 in the number of provided mortgages was far from beat, at that time a total of 14,386 clients took out loans.
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The average loan is almost 3 million
The figures thus confirm the fact that real estate prices are rising. “The ever-increasing real estate prices on the Czech market are also reflected in the increasing average mortgage amount, which already reaches 2,887,178 crowns,” said Jiří Sýkora from Fincentrum & Swiss Life Select.
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As he further stated, the average mortgage amount jumped over the limit of 2.5 million crowns for the first time exactly a year ago and has since increased by almost 382 thousand crowns.
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This year, building societies are also seeing an increase in interest in loans for housing or reconstruction. By the end of November, they had provided loans worth 61.4 billion crowns, which is a year-on-year increase of 34 percent.
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Overpriced apartments
According to Century 21 operations director Tomáš Jelínek, older flats in good condition, for example, are rising by an average of about a tenth year-on-year nationwide, but in large cities it is more. According to the Czech National Bank, the significant growth in newly provided mortgages and housing prices is surprising. At the same time, however, members of its bank board believe that both indicators are likely to slow down in the coming quarters.
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According to the CNB, the continuing strong rise in real estate prices worsened the affordability of housing and caused an increase in the overvaluation of real estate prices. The bank estimates an overvaluation at an average of 17 percent, in selected localities with a high share of investment housing it is up to 25 percent.
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However, the CNB left the limits for providing mortgages unchanged at the end of November. The ratio of the amount of the mortgage loan to the value of the mortgaged property (LTV) thus remains at 90 percent. At the same time, the central bank does not now consider it necessary to renew or tighten other parameters for the other two limits on mortgage lending. In June, the CNB abolished the limit for the ratio between the monthly repayment of all loans and the total net monthly income (DSTI indicator) when assessing mortgage applications. Earlier, in April, it abolished the debt-to-loan-to-net (DTI) ratio.
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However, real estate experts agree that mortgage banks are starting to prepare for worse times themselves. One of the manifestations is the significantly lower valuation of real estate than their current purchase price.
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