International Property News

Czech Property - Banks grant 39% less in mortgages in 2009

26th January 2010

Czech banks granted mortgages worth about Kc73.85bn to citizens in 2009, down by 39 percent from Kc120.09bn in 2008, the Local Development Ministry said Monday.

Banks had expected last year's mortgage market to fall by as many as 40 percent. For this year they expect a slight growth.

For housing alone, excluding for example loans for refinancing of mortgages, domestic banks granted about Kc66bn. In 2008 it was Kc99bn.

"In 2009 the residential market hit the bottom. It was afflicted markedly by buyers' uncertainty as to further development, connected with their fear of getting rid of cash and taking on long-term obligations in the form of mortgages. This year the situation on the residential market will stabilise," consulting company King Sturge analyst Ondrej Novotny told CTK.

The current decrease of the mortgage market could be predicted after the development in the past years. The volume of mortgages granted in the previous years was growing in reaction to the economic growth and low interest rates. Last year, however, banks introduced markedly stricter conditions for granting loans. In addition, citizens were more cautions as to making debts, the ministry said.

"Some potential customers have put off the purchase of real estate as they expect prices to fall further. The objective reason for the decrease in interest, mainly interest in newly constructed flats and houses, is connected with demographic development as the housing needs of the strong age-group of the 1970s have already been satisfied," Milena Brozova of the ministry said.

Mortgages granted to citizens in Kc bn:
Year Volume of mortgages in Kc bn
2001 14.728
2002 22.532
2003 36.212
2004 51.959
2005 72.069
2006 100.84
2007 142.289
2008 120.09
2009 73.85


Source: Prague Monitor