International Property News

Czech Mortgage demand falls slightly in 2008

10th Oct 2008

Mortgage banks operating on the Czech market are unlikely to repeat last year's record results this year, a CTK poll among the banks has shown.

Hypotecni banka reported stagnation for new mortgages year-on-year in Jan to Sept this year, while GE Money Bank saw a 17-percent fall and Raiffeisenbank reported a growth of more than 17 percent in the segment, the banks said.

The banks provided Kc142bn worth of mortgage loans for the full year 2007, up 41 percent on the year.

Jan-June lending this year, however, dropped by a fifth on the year to almost Kc60bn.

Overall data for the Jan-Sept period have not yet been published by the Local Development Ministry.

Banks attribute this year's development above all to a high comparable basis in 2007, which saw an extremely-high rate of interest in mortgages caused by the expected VAT hike and growing interest rates.

The average interest on all mortgage loans provided in Aug this year reached 5.82 percent, the highest value since Jan 2003.

The state could possibly resume support for new mortgages used for buying older homes owing to growing interest rates.

Despite the worse results, the mortgage market is not jeopardised by the current crisis, representatives of the banks have said.

"The Czech mortgage market is relatively stable and demand for mortgages remains strong," Hypotecni banka CEO Jan Sadil said today.

In Q3 alone, Hypotecni banka saw revived interest in mortgages providing 5,717 mortgage loans worth Kc11bn, up 13.6 percent in terms of volume compared to the same year-ago period, where the respective figures reached 5,450 and Kc9.7bn.

The average size of mortgages is also rising, to Kc1.932m in Q3 from Kc1.785m a year ago (Hypotecni banka data).

Source: Prague Monitor