Czech mortgage rates hit new record low in June
Average mortgage rates in the Czech Republic reached a record low in June and analysts are already predicting an all-time low rate for the whole of 2016. Average monthly repayments have also hit a fresh minimum, falling below CZK 5,000 for the first time.
Though the figures are only in for the first six months of the year, Fincentrum say it is already looking like 2016 will be a record low year for interest rates in the Czech Republic.
Attractive rates have led to over 55,200 fresh mortgage contracts being signed in the Czech Republic in the first six months of the year. In June over 12,300 were inked, which is also an all-time high for one month.
Continuing the record breaking theme, the total amount lent last month – CZK 23.8 billion – was also unprecedented. In May 10,800 new housing loans worth a total of CZK 20.7 billion were agreed.
While there was only a slight difference (less than 200) in the number of mortgages agreed in the first six months of the year compared to the same period in 2015, the total volume was up by over CZK 15 billion.
Borrowers’ repayments are also lower than in the past. In June the average amount fell below the CZK 5,000 barrier for the first time ever, scraping under that “line” at CZK 4,999.
Reporting the latest figures on Wednesday, the Czech News Agency pointed out that the attractive rates were not just good news for those taking out fresh loans: They are also a boon to those who refinance their mortgages this year.
Mortgage brokers have no reason to expect business to fall off. Jiří Paták of consultants Chytrý Honza said the low rates were attracting thousands of new clients every month. “We will definitely see new maximums,” he said.
Ondřej Mašín of Reality IQ said clients’ strong spending power would likely have another effect, as people begin turning their attention to expensive properties that have hitherto generated little interest.
Meanwhile the low mortgage rates are also leading to a rise in the number of potential borrowers, says Evžen Korec of developers Ekospol.
People for whom buying property was an unattainable dream just months ago are now making appointments with mortgage brokers, Mr. Korec said.
But not everybody welcomes the cheap mortgage trend. The Czech National Bank regards it as a risk and is planning to tighten its recommendations as regards loans, the Czech News Agency said.
