International Property News

Building societies grant loans worth CZK 17.5bn in Q1

14th April 2008

Czech building societies granted housing loans worth Kc17.5bn in the first quarter of 2008, a year-on-year growth of 28 percent, a CTK poll among of the companies have shown.

The average amount of a loan increased to nearly Kc502,000 in January-March from Kc378,000 last year. On the other hand, the number of granted loans dropped year-on-year.

Building societies signed more than 253,000 new contracts, including contracts on an increase in the target amount, in the first three months, compared with nearly 217,000 a year ago.

The record results in the first quarter are no surprise and only confirm Czechs' growing interest in available money resources for homes, said Jiri Sedivy from the Association of Czech Building Societies (ACSS).

"This is the first time the number of new contracts exceeded a quarter of a million in the first quarter since the change in conditions in 2004," Sedivy said.

Hypo stavebni sporitelna showed the biggest year-on-year growth in the volume of granted loans of 118 percent.

Other building societies also saw a considerable growth in lending volumes. Ceskomoravska stavebni sporitelna (CMSS), for instance, raised the volume of lending by more than a third.

CMSS board of directors member Manfred Koller said interest rates on the market had grown in the past months but this had no impact on interest on home-building savings loans.

Many CMSS clients sign a loan on home building savings to secure an advantageous loan product for many years to come, Koller said.

Besides, a number of mortgage banks' clients switch to loans from home-building societies which have also been offering mortgage-type loans for larger amounts for some time, he added.

Building societies lent nearly Kc74bn in total last year, an increase of 40 percent year-on-year.

The companies signed 862,000 new contracts on home building savings, including contracts on an increase in the target amount, compared with 826,000 in 2006.

The ratio of loans to savings grew by 9 percentage points year-on-year to 46.6 percent in 2007, the Finance Ministry said. But the ratio in Wuestenrot, for instance, amounted to 60 percent at end-March.

Source: Prague Monitor