Fundings in euros are four times cheaper than in Czech crowns
Due to the large difference in interest rates for mortgages in euros and Czech crowns, about 40 percent of corporate loans are in euros, according to the latest data from the Czech Central Bank. This is a volume now approaching 500 billion crowns, stated by the economic journal Hospodářské noviny.
Interest rates for a mortgage in Czech koruna can now be as high as eight percent, while financing in euros can cost up to four times less. This is also confirmed by competitors in the market and by Česka spořitelna spokesman Lukáš Kropík, who claims that “The volume of corporate loans in euros has increased by three times from a year ago.” According to the latest Czech National Bank data from June, the average rate for new transactions in euros was 1.91 percent, for crowns it was over 8 percent.
Investing in euros are mainly exporting enterprises and investors, banks are more cautious in granting them to individuals. Banks usually grant financing in euros only if the applicant also has income in the European currency. This is to avoid the dangers associated with exchange rate fluctuations.
This large difference between interest rates is due to the different policies implemented by central banks to deal with high inflation. Czech National Bank has been increasing its base interest rate since the middle of last year, while the European Central Bank has been apathetic to price growth.
Sources: https://archiv.hn.cz/ ; https://www.camic.cz/it/
Source of mages: https://pixabay.com/ ; https://storyset.com/
