Mortgages in the Czech Republic 2007 (Market Guide)

Gross advances in the Czech mortgage market grew at a CAGR of 28.7% from 2002–06. Various factors have pushed this market upward, including strong demand, high house price growth and falling borrowing costs. What are the current issues facing the Czech mortgage market? Who are the biggest lenders? What will be the size of this sector in the next five years? This report provides the answers.



Report Highlights
Banks occupy the lion’s share of the Czech mortgage market, with over 92.5% of gross advances accounting for this type of institution in 2006 and the remaining 7.5% held by building societies. Typical mortgage interest rates have been declining steadily in the Czech Republic since 2004. In the fourth quarter of 2006, typical mortgage interest rates were 4.91%, a historically low level. In spite of recent buoyancy in the housing market, the Czech Republic’s mortgage debt to GDP ratio is still extremely low for European levels.


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Executive Summary 2
Market size 2
Forecasts 2
Key issues 3
Key market players 4

Market Context 8
Country overview 8
Demographic and economic data of selected European countries 10
Demographic data 10
Economic data 11
Housing market 16
Dwelling stock 16
House prices 18
Government housing intervention 19
Taxes, subsidies and housing schemes 19
Market data 19
Mortgage interest rates 19
Market size 20
Balances outstanding 20
Gross advances 23
Product lines 24
Market structure 24
Structure of the Czech retail banking sector 24
Categories of financial institutions 25
Commercial banks 25
Building societies 25
Credit and savings co-operatives 25
Mortgage market structure 26
Market share by player type 26
Funding 27
Distribution 28
Regulatory environment 28
Industry regulators 28
Czech National Bank (Department of Banking Regulation and Supervision) 28
The Office of Supervision of Savings and Credit Cooperatives 29
Industry associations 29
Czech Banking Association 29
Credit bureaus 30
The Central Register of Credits (CRC) 30
Czech Banking Credit Bureau (CBCB) 30
Regulatory issues and developments in the mortgage market 30
The birth of an integrated European mortgage market is still very far off 30
Basel II will mean a number of changes for lenders 31
Recent national mortgage-related legislation 32
Key issues in the mortgage market 32
Competitor and Product Overview 33
Top three mortgage lenders 33
Market share by balances outstanding 33
Product analysis 34
Typical product characteristics 34
Market Forecasts 36
Forecasting gross advances 36
Gross advances in the Czech residential mortgage market will reach €23.5 billion in 2011 36
Future prospects 37
Market attractiveness 37
Market inhibitors 38
APPENDIX 39
Supplementary data 39
Definitions 40
Balances outstanding 40
CAGR 40
Fixed rate mortgage 40
Gross advances 40
Loan-to-value (LTV) 40
Mortgage intermediary 40
Remortgaging/refinancing 40
Variable mortgage 40
Forecasting methodology 41
Research methodology 41
Further reading 41
European Mortgages 41
Ask the analyst 42
Datamonitor consulting 42
Disclaimer 42

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Table 1: Forecast of residential mortgage gross advances in the Czech market , 2005-11f, (€m) 2
Table 2: Total population across European countries, 2002-06 10
Table 3: GDP at current rates across European countries, 2002-06, (€bn) 11
Table 4: GDP per capita at current rates across European countries, 2002-06, (€) 12
Table 5: GDP growth rates across European countries, 2002-06, (%) 13
Table 6: GDP composition by sector across European countries, 2006, (%) 14
Table 7: Inflation across European countries, 2002-06, (%) 15
Table 8: Unemployment rates across European countries, 2002-06, (%) 16
Table 9: Age of the Czech Republic's dwelling stock, 2001 17
Table 10: Residential mortgage balances outstanding compared to GDP of selected European countries, 2006, (%) 23
Table 11: Market share of top three competitors in the Czech residential mortgage market, 2005-06, (€m) 34
Table 12: Forecast of residential mortgage gross advances in the Czech market , 2005-11f, (€m) 37
Table 13: Typical mortgage interest rate and repo rate in the Czech Republic, Q3 2004-Q4 2006 39
Table 14: Mortgage balances outstanding in the Czech mortgage market, 2002-06, (€m) 39
Table 15: Mortgage net lending in the Czech mortgage market, 2002-06, (€m) 39
Table 16: Mortgage gross advances in the Czech mortgage market, 2002-06, (€m) 40


Figure 1: Gross advances have grown significantly over the last five years in the Czech Republic 2
Figure 2: Ceska Sporitelna has the largest market share of the mortgage market in the Czech Republic, 2005-06 4
Figure 3: A snapshot of the Czech Republic's key statistics, 2006 9
Figure 4: The dwelling stock in the Czech Republic has grown slightly over 2001-05 17
Figure 5: Owner-occupation is low in the Czech Republic compared to other European countries, 2001 18
Figure 6: Typical mortgage interest rates fell in the Czech Republic to 4.91% in Q4 2006 20
Figure 7: Residential mortgage balances outstanding in the Czech Republic have grown exponentially in recent years 21
Figure 8: Net lending stood at €3.7 billion in 2006 22
Figure 9: Gross advances have grown significantly over the last five years in the Czech Republic 24
Figure 10: Large banks accounted for 54.6% of gross advances in the Czech Republic in 2006 26
Figure 11: Ceska Sporitelna has the largest market share of the mortgage market in the Czech Republic, 2005-06 33
Figure 12: Gross advances in the Czech mortgage market are forecast to reach €23.5 billion in 2011 36


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