February data from CBA Hypomonitor, which captures data from all domestic banks and building societies providing mortgage loans on the domestic market, showed the second significant decline in the volume and number of mortgages provided this year. This confirms earlier predictions that the mortgage market will slow significantly this year.
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In February, banks and building societies provided households with mortgage loans in the total amount of CZK 25.1 billion. Compared to January, this is a decrease of 7.5 billion crowns, ie 23 percent.
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The volume of actually newly provided mortgages was 20.8 billion crowns in February, 5.5 billion crowns less than in January. The volume of refinanced mortgages was also two billion crowns lower, in February people arranged them in the total amount of 4.3 billion crowns.
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The same trend followed the number of mortgages granted, which fell by 23 percent in February compared to the previous month from 10,260 to 7,890. This is the lowest number of mortgages granted since January 2020. The number of new mortgages fell by 21 percent month-on-month .
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| Volume, numbers and average interest rates of mortgages granted in February 2022 |
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| Volume (in billions of CZK) |
Number | Rate (v%) |
|
| Total | 25,1 | 7890 | 3,80 |
| New loans | 20,8 | 6139 | 3,84 |
| Refinanced from another institution | 3,6 | 1475 | 3,65 |
| Refinanced internally | 0,7 | 276 | 3,61 |
| Source: CBA Hypomonitor | |||
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At the beginning of each year, financial institutions observe lower interest in mortgage loans, but the decline this year goes beyond this normal seasonal development. As the CBA Hypomonitor’s data suggest, both the numbers and the volumes of mortgages provided are declining at double-digit rates year-on-year. This is almost a 40 percent drop in the total number of mortgages, and a 20 percent drop in the number of actually new mortgages.
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A more significant year-on-year decline can be observed in the case of refinanced mortgages. While in February 2021 clients refinanced mortgages for almost 14 billion crowns, a year later their volume was only 4.3 billion crowns.
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In February, the fewest mortgages were provided in the last two years, since January 2020
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The number and volume of mortgages provided may in the foreseeable future be reflected in a further tightening of conditions for the provision of mortgages, which will come into force in April this year.
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“The regulator is bringing back the limits for the DSTI and DTI credit indicators, which it canceled during the pandemic, and at the same time will tighten the LTV limit again to 80 percent. Although the growth in rates has also been reflected in interest in mortgages and interest has declined in the last month, we expect a slight increase in the coming days so that clients can use the current conditions for the ratio of mortgage to real estate price, “added Filip Beneš of UniCredit Bank.
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“Given that the mortgage can be approved by the end of March 2022 under the original terms of LTV, DTI and DSTI, we expect continued strong demand for mortgages. Especially people over the age of 36, who plan to obtain a 90% mortgage, should start solving their situation in March, given the impending tightening, ”Vojtěch Prokop from the Zaloto mortgage market added for Novinky.cz.
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Mortgages become significantly more expensive
The interest rate on actually newly granted mortgage loans reached 3.84 percent in February. In a month-on-month comparison, it is thus 45 basis points higher.
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The growth of interest rates is accelerating, in February it was the fastest since the middle of last year, when the CNB began to raise rates. The average mortgage rate thus reached its highest level since the end of 2011 in February. However, it must be taken into account that it captures concluded contracts negotiated with clients in previous months, when mortgages were even significantly cheaper. The average mortgage rate on newly concluded contracts is therefore below the level of current offer mortgage rates, which in February most often ranged from 4.5 to 5.5 percent.
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The average amount of a new mortgage in February was 3,395,041 crowns.
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