Banks are trying to attract new clients by decreasing their interest rates and promoting spring mortgage campaings

The total number of the mortgages in Czech Republic has decreased

The new parameters from the Czech National Bank (ČNB) caused a huge decrease in the demand for mortgages. Banks have to find new ways to attract new clients. One of the possibilities is to decrease the interest rates resulting in cheaper mortgages. Many banks, such as Komercni banka, Hypotecni banka, Reiffeissenbank, mBank, Ceská sporitelna and Wustenrot, has decreased their interest rates during February. Another reason for this decrease is the ČNB has postponed increasing the prime rate. 

ČNB hasn´t increased the prime rate but has increased the restrictions on early repayment of mortgages.

ČNB decided to ban some of the fees that banks are charging for the early repayment of the mortgage. From now on the banks can only charge fees associated with the early repayment of the mortgage and these need to be reasonable and related directly to the cost of the repayment. These fees include administration, postage, copying documentation, and fee for providing the mortgage or estimate fee. Another condition for getting the lower discounted interest rate is to open a new bank account in the bank you are applying for the mortgage or to arrange for insurance covering the ability to repay. On the other hand, banks cannot charge for commissions payable to the intermediaries or for any resulting decrease in the interest income of the financial institution or their interest costs from the loans. This regulation will help arrange better mortgage conditions for some of these applicants, however it will likely lead to more expensive mortgages with the longer fixation foremost. This regulation will mean another obstacle for many applicants because banks will have to manage their increased risks and costs of issuing mortgages. This can lead to an increase in interest rates which can result in decrease in the amount of mortgage loans since many applicants will be prices out of the market. 

Property prices are increasing but the supply is decreasing

Property prices are still increasing in large cities. There are less and less new apartments being offered and the ones that are on offer are usually larger and more expensive that the average person can afford. Another problem is the new strict condition for qualifying for mortgage loan which makes it impossible for many people to even purchase any property. We can expect another decrease in the amount of apartments sold and an increase in their average prices. The rental market will see an increase in rental activity from the applicants who will fail in getting a mortgage.