More affordable mortgage rates

Erste Bank Research Team Erste Bank

On the radar

Flash GDP growth in Hungary surprised to the downside, at 1.3% y/y.
In Czechia, flash GDP arrived roughly in line with the expectations at 0.4% y/y.
Yesterday, retail sales in Slovenia arrived at -0.1% y/y and today Croatia will publish their figure.
Tomorrow, flash CPI will be released in Poland, Croatia and Slovenia.
Also tomorrow, Serbia will publish Q2 GDP growth flash estimate, alongside retail sales, trade and industrial production.

Economic developments

The disinflation process, which paved the way for monetary easing in CEE and Eurozone, has already positively impacted mortgage borrowing rates for households. The steepest decline in average interest rate on new mortgages for households was observed in Hungary (-4.6 percentage points), while Slovakia saw a very limited decline (-5 basis points) from CEE countries. Due to the brisk pace of monetary easing in Czechia and Hungary this year, both countries reported the largest declines in interest rates on new mortgages in 2024, with decreases of 0.6 and 1.9 percentage points, respectively. Currently, Poland offers the highest mortgage rates in the EU, as the central bank absented in monetary easing this year and indicates possible rate cuts only by 2025. The mortgage market, heavily exposed to variable rates, can also be partially blamed for the high average mortgage rates, especially with inverted yield curves.

Market developments

CEE currencies started this week on a weaker note. The Czech koruna slid towards 25.4 CZK/EUR yesterday, and the Polish zloty lost about 0.5% day-on-day against the euro. The biggest move was seen in the Hungarian forint, as a disappointing flash estimate of 2Q GDP growth published this morning sent EUR/HUF above 394. Since the end of last week, the forint lost about 1% against the euro. The bond market remains rather calm, with markets focusing on this week’s FED meeting, which may provide more insight into a possible rate cut in September.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.