In February alone, people took out mortgage loans for almost 30 billion crowns, so the shortest month of the year, according to Fincentrum Hypoindex statistics, became the strongest measured month in domestic history this year. The influx of people into banks was helped by fears of future increases in mortgage rates.
“February this year surpassed the record November 2016. However, the number of mortgages provided is not growing as fast as volumes, which is reflected in the average mortgage, which for the first time exceeded three million crowns,” said Jiří Sýkora, mortgage specialist at Fincentrum & Swiss Life Select.
According to him, the banks approved 1,500 more mortgages in February than in January and even almost 3,000 more loans than during the February preceding the outbreak of the coronavirus pandemic.
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This year’s strong year comes after last year’s record, when banks lent 254 billion crowns. “People are responding to the strong media coverage of the expected rise in interest rates. This means that they speed up purchases and negotiations in style: the sooner the better, ”says Libor Vojta Ostatek, head of the consulting company Golem Finance.
According to him, the volume of loans is further pushed up by old-new reasons, such as the growth in demand for more expensive real estate in attractive locations, as well as higher demand for mortgages from higher-income people in those parts of the economy not affected by the pandemic.
Those interested in mortgages are also being pushed to the counter by the still favorable rates, which even fell to an average of 1.93 percent in February. “However, rates in the market are starting to rise slowly and it can be assumed that this growth will already be reflected in the March Fincentrum Hypoindex,” adds Sýkora.
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During February, mBank and Moneta Money Bank raised rates by one tenth. Already at the end of February, the ČSOB Group also announced an increase in rates, which increased mortgage rates by up to 0.2 percentage points from the beginning of March. In mid-March, Air Bank also decided to take the same step.
Market people expect rates to rise further this year. “It is possible that average mortgage interest rates may easily exceed two percent during March, but this situation will not occur until April,” said Martin Novák, chief analyst at Broker Consulting. Rates should then continue to rise slightly. “The rise in rates will not be dramatic, at the end of the year I see an average rate of around 2.2 percent,” adds Ostatek.
It is higher rates that should cool the market later in the year. “The rise in interest rates will slow down the demand for mortgages, and last year’s record year will probably not be repeated,” the March analysis of the Czech Banking Association predicts.
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