Thursday, 24 April 2014

No.of mortgage loans in Jan lowest in 1.5 yrs, rates grow

21 February 2013

Prague, Feb 20 (CTK) - People in the Czech Republic signed 5,146 mortgage contracts in January, the lowest number in the past one year and a half, and interest rates grew slightly from the record-low of 3.21 percent, Fincentrum Hypoindex data have shown.

Interest rates had been falling constantly since August 2012 and were the lowest at 3.17 percent in December 2012.

The index started monitoring the average interest rate on mortgage loans irrespective of the fixation period in 2003.

The volume of the mortgage contracts people signed in January reached Kc8.386bn, compared with Kc9.251bn in January 2012 when people took 5,443 mortgages. The January amount is the lowest since February 2011 when mortgage contracts for Kc7.098bn were signed.

"None of the important banks raised the rates but the average interest rate in the index was now not influenced by any special offer. The moderate correction of Fincentrum Hypoindex rates in January was caused in particular by the change in the share of volumes among banks," said Fincentrum analyst Josef Rajdl.

"This is related to the usual January decrease in transactions when the market calms down for a while after the meeting of the business targets," he added.

"January sales of mortgage loans have shown a fluctuating trend in the past few years," Hypotecni banka CEO Jan Sadil told CTK.

"The January figure this year decreased by an annual rate of 10 percent but increased by 30 percent compared to January 2011," he said.

It is premature to say on the basis of January's results how the mortgage market will develop this year. Things will be more clear after the first half of the year, he added.

He attributed the January mild growth in interest rates on mortgage loans to the end of discount offers from December last year.

From smaller banks, for example Equa bank and Wuestenrot cut interest rates in January. Equa bank newly offers mortgage loans with interest rate cut by 0.3 percent. Rates fixed for five and three years thus now start at 3.19 percent.

Banks granted 60,461 mortgages worth Kc123.21bn last year. The mortgage market benefitted from the record number of mortgage contracts signed five years ago. At that time, the same as last year, rates fixed for five years were the most popular.

"Refinancing was thus very frequent in 2012. The share of refinanced mortgage loans is estimated at between 20 and 30 percent. Banks mostly do not want to disclose exact figures," Rajdl explained.

No. of mortgage loans Volume of mortgage loans (Kc bn)
Jan 2013 5,146 8.386
Jan 2012 5,443 9.251
Jan 2011 3,404 5.716
Jan 2010 2,533 4.28

Source: Fincentrum Hypoindex

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