This year, the number of loans is growing again. Is everyone really taking out mortgages this year?
Or is it just a number-inflated bubble? More in today's article.
Mortgages are rising again this year. We read about it all the time in the media. Is everyone really buying property this year, or is it something else?
Despite the current crisis, the popularity of home ownership is very high. Lending volumes are still growing. But is the number of people taking out mortgages growing, or is it just the amount of loans that is rising?
What do the numbers say?
The total volume of new residential mortgage loans from banks and building societies reached 18.8 billion crowns in September, according to statistics from the Czech National Bank and the Czech Banking Association, up 40% from September 2019.
What is important to mention, however, is that it is the volume of credit that is increasing. So it's not that there's a larger number of buyers and therefore a larger number of properties sold, it's just the overall price of the properties, which is getting higher and rising.
Two aspects further support interest in new mortgages, and they are: low interest rates and the total elimination of the tax on the acquisition of real estate.
Interest rates and their reduction
Mortgage loan interest rates have fallen for the sixth month. In September, according to Czech National Bank data, the average interest rate on mortgage loans fell to 2.12%, representing a decrease of 0.37 percentage points in the year to year. Similarly, the interest rate on building savings fell to 3.38%.
According to the chief adviser of the Czech Banking Association (ČBA), Vladimir Staňura, the further development of mortgage rates is uncertain. It states that banks may go down with their interest rate offerings thanks to the fall in inter-bank rates, and while the scope for a fall is significantly reduced, it still exists.
People are not afraid of mortgages even in times of crisis
A survey by Czech Banking Association shows, that almost one-tenth of respondents plan a mortgage despite the ongoing crisis related to the coronavir pandemic. They had planned to purchase the property before the pandemic began, or it was the pandemic and current market conditions that sparked their interest.
It can thus be concluded that, of the 18-to-49 age group to which the vast majority of mortgage applicants are eligible, some 400,000 people are now considering a mortgage.
What do mortgage clients most often finance?
The total amount of mortgage is most often in the range of one to two million crowns (36%), with 17% of those surveyed repaying between two and three million crowns. As the average level rises, so does the average mortgage repayment period. The usual time for clients to repay their loans is between 25 and 30 years (56%), 17% between 20 and 24 years old, according to the survey.
Clients cooperate with mortgage specialists
A large proportion of those who are already paying off their mortgage said they had put their mortgage specialist on the spot (45%). Conversely, those who are yet to plan a mortgage, especially younger generations, want to make decisions based on the interest rate (53%) and APR (42%). For 32% of clients, the price and size of the property (18%) are of particular importance when choosing the property.
