Is there a turnaround in the mortgage market? ČSOB raises rates, growth is announced by the Governor of the CNB


The ČSOB Group, of which Hypoteční banka and Českomoravská stavební spořitelna (ČMSS) are also members, has been adjusting housing loan rates since 8 March. Rates will increase for mortgage loans with 70% LTV by 0.1%, for 80% LTV by 0.2%. Interest rates at 90% of LTV remain unchanged. ČMSS increases rates on secured intermediate loans from building savings by 0.1%. He does not expect a further decline in mortgage rates, and on the contrary, the governor of the Czech National Bank, Jiří Rusnok, sees a “start to a slight increase” in mortgage rates.

“For example, you get a mortgage with an LTV of 80% and a five-year fixation at a rate of 2.29%. Interest rates on secured intermediate loans from Liška start at 1.69%, unsecured intermediate loans can be obtained at a rate of 3.5%, ”states ČSOB in today’s press release. After a record year in the mortgage market, which was also accompanied by low interest rates reaching an average of less than 2%, the ČSOB Group proceeded with a slight increase in rates on housing loans. The reason is the increase in the price of resources on the interbank market.

“We have decided to respond to the rising price of resources, which has been rising for several months. We have kept the rates at the bottom for a long time and now we are approaching a very slight increase in price, “explains Andrea Vokálová, spokeswoman for the ČSOB Group for housing finance. The new interest rates apply to applicants from ČSOB, Hypoteční banka and Českomoravská stavební spořitelna from 8 March 2021.

Rusnok: We’re starting for some modest growth

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The average interest rate on mortgages fell for 10 months in a row to an average level of 1.94 percent. The Governor of the Czech National Bank, Jiří Rusnok, told the Seznam Report that he did not expect a further decline. “In general, interest rates on longer maturities in the financial market tend to rise, slightly. We see this in government bonds, not only ours, but also abroad. Mortgage interest rates are very closely linked to longer-term interest rates in the financial market in general, so I would rather not expect a further decline there, I think we are more likely to start some modest growth, “said Rusnok.

According to him, the CNB does not plan any further tightening of conditions for applicants for mortgage loans at this time. “It simply came to our notice then. But as we repeat, we are monitoring the situation on an ongoing basis. And if we evaluate it at some point in regular evaluations about twice a year, that it would require us to get involved, then we are ready for it, “Rusnok said in the same interview.

In the past, on data for 2019, the CNB stated that apartment prices are overvalued by 15 to 25 percent. For 2020, Rusnok estimates: “It can be expected that not much has changed. It will be similar. “

Hypoindex: January tenth rate drop in a row. Last?

The average mortgage rate fell to 1.94 percent in January from 1.96 percent in December. The rate fell for the tenth month in a row. This follows from the data of Fincentrum Hypoindex. In January, the volume of mortgages provided fell by more than 4.5 billion crowns compared to December last year. However, the volume of agreed mortgages increased by more than eight billion crowns year-on-year.

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“Compared to previous months, January was not one of the strongest, however, as the beginning of the year, with the volume of loans provided of 24.942 billion crowns, it is the best start to the new mortgage season in the entire history of Hypoindex,” said Fincentrum & Swiss Life Select mortgage specialist Jiří Sýkora.

Given that the price of resources has been rising for several months and the riskiness of loans is gradually increasing, he said the continuing decline in the average rate is surprising. However, the share of non-performing loans is not yet as high as banks expected in the first wave of the pandemic, he added.

Compared to December, the number of provided mortgages also decreased in January, by 1,571 to 8,380. Nevertheless, the mortgage market only managed a more successful start to the new year in the number of provided mortgages in 2017, when banks arranged 8665 mortgages.

Just as the average mortgage rate has been falling for several months in a row, so has their average mortgage rate rising. Now it has reached 2,976,346 crowns. However, according to Sýkora, the growth of the average mortgage slowed down in January. While during December the average mortgage increased by almost 80,000 crowns, in January it was only 10,000 CZK. This may indicate a slowdown in real estate price growth.

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