According to statistics released by the Czech Banking Association Hypomonitor, banks and building societies in the Czech Republic provided mortgage loans amounting to 12.3 billion CZK in May. This figure represents a significant 17% increase compared to the previous month of April. The volume and number of mortgages in May approached levels seen in March and, after seasonal adjustments, reached the highest level since mid-2022 when the market began to experience a slowdown.

While still subdued when compared to historical figures, the values recorded over the past three months indicate a slight revival in the mortgage market. On a year-on-year basis, the volume of mortgages provided in May was 40% lower, similar to the figures observed in April.

Martin Vašek, CEO of Hypoteční banka, noted that the situation is starting to stabilize. Real estate prices continue to decline, particularly for larger properties in remote locations, which has impacted buyer interest. However, concerns about the accessibility of mortgages are gradually diminishing, and with the relaxation of rules by the Czech National Bank, the mortgage market is expected to gradually recover.

In May, the volume of newly provided mortgages, excluding refinancing, reached 10.4 billion CZK, a 19% increase compared to April’s 8.8 billion CZK. Refinanced loans, whether internally or from other institutions, accounted for 2 billion CZK, up from April’s 1.8 billion CZK.

The number of newly provided mortgages also witnessed an increase from 2,900 to 3,500 in May. This figure, along with the values recorded in March, represents the highest level since July of the previous year. However, it is still lower compared to the average monthly number of new mortgages observed in the first half of 2022, which stood at around 6,000, and even lower than the figures from the preceding year, which reached 9,500 per month.

The rise in both the number and volume of newly provided mortgages indicates a positive trend for the Czech real estate market, which has faced significant challenges due to the COVID-19 pandemic. The recent relaxation of rules by the Czech National Bank is expected to further stimulate the mortgage market. Moreover, the declining trend in real estate prices may attract more buyers, leading to a potential market revival in the near future.

Article by Prague Forum