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According to the latest Local Development Ministry data mortgage banks on the Czech market granted 83,344 new mortgage loans worth over Kc142bn to individuals in 2007.

In Prague alone, mortgage banks provided 24,000 loans worth Kc54.5bn and in the second largest Czech city, Brno, Kc13.4bn worth of them.

Overall, the volume of mortgage loans granted to individuals, firms and municipalities totalled Kc184bn in 2007 and the number rose to 86,000 from 69,000 the year before.

Experts expects a further growth of the mortgage market this year, though at a slower pace.

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As the crises deepens on the world financial markets, share prices on the Prague Stock Exchange (BCPP) sank to the lowest level in over fifteen months. The PX index lost 4.62 percent to 1,489.6 points, according to the bourse results.

Power company CEZ, the most traded title on the bourse, shed over 5 percent to Kc1,170.

Dealers ascribe the fall on the bourse to the selling mood on advanced foreign bourses where investors started to fear recession of the US economy which would hit global markets as well.

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Panics of global markets shattered Prague bourse, it lost all earnings from 2007. Further, what started as morgage crises in US is comming with real influence to Eastern European economies. Financial crises will truly influence the development not only in 13 countries of Eurozone but also the faster growing Eastern European ones. New assumptions of growth of Czech economy lessen to 4%.

Prices of shares traded on the Prague bourse after a further selloff today slumped to the lowest level since the beginning of last January, with the PX index losing 3.09 percent to 1,570.1 points, the bourse said. The index has decreased by 13.5 percent this year. In about two weeks Czech shares wiped out nearly all the profits made last year.

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The recent acceleration of the Czech Republic’s inflation is rather the result of the coincidence of two factors and will soon end, Czech National Bank governor Zdenek Tuma said at the Euromoney Conference in Vienna today.

“We expect that within 12 to 18 months, inflation will again be around 3 percent,” Tuma said.

The Czech Statistical Office said recently year-on-year inflation accelerated to 5.4 percent in December from 5 percent in November.

Tuma described the growing food and energy prices across the world and the effect of the country’s internal reforms as the main inflationary factors at present.

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The Prague bourse fell further today and the loss accumulated since the beginning of this year already exceeds 10 percent, as the PX index shed 1.9 percent to 1,620.2 points, its lowest close since March 6, 2007, the bourse said.
The biggest loser, Erste, dropped 4.44 percent to Kc1,075. developer ECM lost 2.98 percent to Kc846.5 and Telefonica O2 put off 2.43 percent to Kc518.
Negative news from the USA has raised the concern of financial markets about possible recession in that country, sent the price of crude oil sharply down and also weakened the dollar.

(Czech News Agency)

The Czech crown opened at an all-time high to the dollar today, at Kc17.48/USD, on the dollar’s fall in world markets, Patria Online server said.

Before 10:00 a.m. the crown weakened slightly to Kc17.51/USD. The unit is trading at Kc25.88/EUR, 6 hellers away from its record high to the euro.

The dollar started to lose already on Thursday after US central bank chairman Ben Bernanke suggested that the bank could cut interest rates by half percentage point at the end of January. The dollar is now traded weaker at around USD1.479/EUR in global markets.

“We fear that the worst is not over yet for the dollar. Testing of USD1.50/EUR within a single month is very likely,” Next Finance analyst Vladimir Pikora said.

2007 showed a record 50% growth in newly provided mortgage loans in the Czech Republic.

Ceska sporitelna and Hypotecni banka, the largest mortgage banks on the Czech market, together lent over Kc85bn in mortgage loans last year, and according to estimates of experts, all banks active on the domestic market provided Kc150bn in mortgage loans last year. The average size of a mortgage loan in the country rose to Kc1.7m in the year.

The volume of loans provided by Raiffeisenbank last year more than doubled to Kc21.4bn. Hypotecni banka lent over Kc40bn to clients, over 50 percent more than in 2006. Hypotecni provides loans also to clients of the banks CSOB and Citibank.

Ceska sporitelna provided Kc45.4bn worth mortgage loans, over a quarter more than a year earlier.

“High interest in new housing and mortgage loans will certainly last in the coming years. Last year’s 50 percent growth dynamics were extreme, though. In 2008, seen the huge base, we expect roughly a 10 percent growth,” Hypotecni banka CEO Jan Sadil estimated.

A gradual growth in interest rates will most likely act against interest in taking a mortgage loan. Some estimates put the growth in instalments at Kc2,000 a month compared with the previous years.

Mortgage banks provided over 319,000 mortgage loans for more than Kc434bn to people from the start of their activities in mid-1990s to September 2007.

Mortgages are also contributing to the growing household debt. Czech National Bank (CNB) data show that Czechs owed nearly Kc700bn to financial institutions to end-November 2007, up Kc173bn year-on-year.

Czech citizens can travel freely across almost the whole of Europe without border checks as of today, as the Czech Republic, along with another eight EU newcomers, joined the Schengen area at midnight.

After the entry into NATO in 1999 and into the EU in 2004, this is another significant international event in the Czech Republic’s history, and a breakthrough step on the borders between the states which the Iron Curtain divided into the West and the East before 1989.

Up to now, the Schengen area included 13 old EU countries, (without Britain and Ireland) plus Norway and Iceland. Now it has been joined by all EU newcomers from 2004 except for Cyprus which has applied for its entry’s postponement.

Apart from the Czech Republic, the other Schengen newcomers are Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

No border checks are applied inside the Schengen area. Out of the Czech Republic’s four neighbours, Germany and Austria are among the old Schengen members, while Poland and Slovakia are among the fresh members. The Czech Republic is now situated completely inside the Schengen area and checks have been lifted along all its borders.

People celebrated the event at many places along the 2,200-km-long Czech state border.

Mayors of border towns say the lifting of checks will facilitate the exchange of workforce and boost tourism.

On the other hand, the Austrians and Germans living in border areas voice fears of swelling crime. The same fears have been expressed by Czech municipalities situated along the borders with Poland and Slovakia.

The main Czech celebrations will be held in the Czech-Polish-German border area today. Czech and Polish PMs, Mirek Topolanek and Donald Tusk, German Chancellor Angela Merkel and EC President Jose Barroso will attend the event at the border crossings Zittau-Friedenstrasse-Hradek nad Nisou.

The Czech Republic is a net recipient from the EU contributing Kc94bn to the EU budget between 2004 and the first half of 2006 and receiving Kc112.3bn, the Local Development Ministry said at a news conference today referring to data of the Finance Ministry.

“For the time being the surplus is not very big,” Deputy Local Development Minister for European affairs Daniel Tousek said.

In the previous budget period, the Czech Republic ranked among countries with the worst results as regards drawing EU funds. Among the EU newcomers, it occupied the last three positions together with Cyprus and Latvia.

Tousek blamed it on the financing method, with projects financed after their implementation. Such a method is a big burden for public budgets and the private sector, he said.

In the next budget period, emphasis will be laid on continuous financing preventing delays in money transfers.

Expert on structural funds Petr Pazout of Optimus Consult & Invest, however, said that financing projects after their implementation is one of the causes of delay in drawing EU funds in the 2004-2006 budget period. Late calls for participation in some operational programmes or lack of interest in certain measures on the part of end users can be bigger problems, said Pazout.

The Local Development Ministry wants to change management of operational programmes in the next budget period so as to improve drawing money from the EU, said Tousek.

Under the EU rules, the Czech Republic can draw money from the EU also after the expiry of the 2004-2006 budget period.

In 2007 to 2013, the Czech Republic may get Kc700bn from EU funds.