Banks in the Czech Republic seem desperate to sell as many mortgages as possible, upping their game by nearly 40% in one year, iRozhlas reports.
According to statistics from České bankovní asociace (Czech Banking Association) and České národní banka (Czech National Bank), a total of CZK 22.1 billion worth of mortages were sold to people in November alone, which is a 7% increase from the month before, and a 39% increase from November 19. This is the highest ever recorded by the CNB.
The CNB’s data shows that the average monthly mortgage payment has decreased more than CZK 800, or 0.34% from a year ago. It also dropped 0.05% from October to November 2020.
Vladimir Staňura, an advisor from the CNB said the mortgage market was probably close to bottoming out and sees real estate prices taking a much-needed cool-off for 2021.
“Both APR and interest rates are really low, and the market is probably close to its bottom… In my opinion, the market will fall, although not dramatically. The records of 2020 probably won’t be repeated. Unemployment and interest rates will rise… Government stimulus for COVID-19 will end, So there’s many reasons to expect a certain cooling of the market.”
Refinancing of mortgages also increased to CZK 6.4 billion, which is the biggest volume of mortgage refinancing ever seen in Czech history, by a lot. The second highest was in November 2016, when it was recorded at CZK 4.8 billion. The CNB said that the refinancing accounted for 29% of new business for banks, as customers were lured in by the low interest rates, low early mortgage repayment fees, and the abolition of a real estate transfer tax.
As mortgages fly off the shelves and real estate prices go up, rental prices are actually going down because of the sheer lack of tourists, students and workers shut out of the country by the coronavirus restrictions.
Tomáš Jelínek, COO of Century 21, told Novinky that following a big spike in vacant apartments, rental prices went down 7% in Prague, and in some of the more touristy spots, up to 30%.