Czech mortgage market jumps in 2011

PRAGUE Jan 25 (Reuters) - The number of mortgages provided by Czech banks rose by 40 percent last year from 2010, data showed on Wednesday, confounding fears that credit in emerging Europe would dry up due to the crisis in the neighbouring euro zone.

Banks lent more than 119 million crowns($6.09 million) in 71,088 individual loans, the data from the Regional Development Ministry showed, as interest rates charged on mortgages gradually declined through the year.

Low official interest rates in the central European country, coupled with strong competition in the sector dominated by well-capitalised banks, has kept borrowing relatively cheap.

The average mortgage rate was 3.65 percent in November last year and the rate has been gradually declining from 4.28 percent seen in April, a consultancy Hypoindex data showed.

The Czech banking association said last week lending to households would continue to lead lending growth this year.

Main Czech lenders are units of euro zone banks including Belgium's KBC, Austria's Erste Bank and France's Societe Generale.

There have been fears that credit would dry up in emerging Europe as west European parent banks withdrew liquidity from local banks to improve their own capital buffers. ($1 = 19.5243 Czech crowns) (Reporting by Jana Mlcochova; editing by Anna Willard)