The same trend was followed by the number of mortgages granted, which fell by 28 percent to 10,000 in January compared to the previous month. This is the lowest number of mortgages granted since August 2020. The volume of mortgages actually granted in January fell from 34.2 billion to 26.3 billion, for refinanced loans from ten to 6.3 billion. The number of newly granted mortgages fell month-on-month from 9,900 to 7,700.
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“Clients’ interest in mortgages fell sharply in January compared to the end of the year, which we primarily attribute to the continuing rise in interest rates. We expect a further cooling of the market after April this year, when stricter regulation of limits for the provision of mortgages enters into force. For the whole of this year, we expect an overall market decline of around 50 percent, ”said Matěj Novák, Mortgage Manager at Moneta Money Bank.
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From a year-on-year perspective, the volume of mortgages fell by one percent in January, the number by 11 percent. This is mainly due to the year-on-year decline in refinanced loans, while indeed new loans continued to grow at a double-digit rate in January, although the dynamics also slowed markedly compared with previous months.
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The interest rate on actually newly granted mortgage loans rose to 3.4 percent in January from three percent in December. The growth of rates thus accelerates further and was the fastest in January since the middle of last year, when the Czech National Bank began raising rates. The average mortgage rate thus reached its highest level in January since the turn of 2012 and 2013.
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As in previous months, the average January interest rate still reflects concluded contracts that were negotiated with clients in earlier months, when interest rates were even lower. Therefore, the average mortgage rate for newly concluded contracts is still below the mortgage rates. These most often ranged in the wide range from four to five percent in January, and given the development of market interest rates, according to the association, their further growth can be expected.
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“We expect interest rates to go up by around 5.0 to 5.5 percent by the middle of this year, which could gradually start to fall at the end of the year,” said Raiffeissenbank’s mortgage manager Milan Voldrich.
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Market interest rates with longer maturities, which are important for the development of mortgage rates, are now at the highest level since 2008 and 2009. At that time, the average rate on new mortgages was around 5.5 percent, according to official CNB data. Mortgage rates should gradually move towards this limit this year, although the specific rate will depend on the individual parameters of the mortgage, ie the length of the fixation or the size of own funds.
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“With a longer fixation, the interest rate should decrease slightly, which reflects the current development of interest rates in the market,” said CBA chief economist Jakub Seidler.
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