Prague - The average interest rate on mortgage loans in the Czech Republic dropped to 2.88 percent in April, hitting the lowest level since it started to be monitored in 2003, according to the Fincentrum Hypoindex data.
České peníze, bankovky, koruna, klíč, dům, hypotéka, nájem, stavební spoření - ilustrační foto. CTK Horázný Josef, Fluger René, Fotobanka ČTK
The previous all-time low was set in March when the average rate was 2.93 percent. The index monitors the average interest rate on mortgage loans irrespective of the fixation period.
Year-on-year, interest rates on mortgages declined by 0.2 percentage points in April.
The sharp drop in mortgage rates will relieve above all household budgets, as a client who had taken out a Kc1m mortgage loan five years ago at an average interest rate could refinance the loan in April, saving Kc1,411 a month on average if maintaining 20-year maturity.
"Differences among individual banks also decreased along with the drop in average interest rates in April, with May also bringing another wave of rate cuts," Fincentrum's chief analyst Josef Rajdl said.
"Although banks keep coming up with new ideas of how to push rates even lower and the room for further lowering is sufficient considering financing costs, it is possible that parent banks may be unwilling to see another significant drop," Rajdl said.
The number of mortgage loans granted in April dropped by 4.3 percent year-on-year to 7,193 in April, but their volume remained unchanged at Kc11.9bn.
The average amount of a newly granted loan increased by 4.5 percent year-on-year to Kc1.656m in April.