The Czech National Bank may get extended powers in being able to dictate
conditions for mortgage loans to banks, according to an amendment to the
law approved in its first reading by the lower house on Friday.
At present the central bank only has the right to issue recommendations which are not binding, although they are generally adhered to. According to the bill’s proponents it is to lower the risk of potential losses and protect the resilience of the financial sector.
The proposed amendment was vehemently opposed by the Civic Democrats, the Pirate Party a TOP 09, who argued that it could make housing less accessible to young people.
It is now being reviewed by the Budget Committee in the Chamber of Deputies.
Despite a growing economy and higher salaries, many Czechs are still taking loans to buy Christmas gifts for their nearest and dearest. According to a survey carried out by the Czech Banking Association, some seven percent of Czech consumers will borrow money to cover their seasonal expenses. What is more, around one-third of those are willing to take high-risk loans.
Czech households' debt to banks and credit unions rose by CZK 9.24
billion to almost CZK 1.713 trillion in August when compared with July
data, this according to statistics released by the Czech National Bank on
Monday. In year-on-year terms the rise was higher than CZK 101.9 billion.
The debt of non-financial corporations rose by CZK 16 billion compared to
July and currently amounted to 1.145 trillion crowns. In year-on-year
terms, this was a CZK 42 billion increase.
Household debt has been rising continuously since February 2016, with mortgages making up roughly three-quarters of the entire debt, according to the Czech National Bank.
Czechs living in rented homes spend more than homeowners, according to a study by the Partners consulting agency, presented on Wednesday. On average, Czechs renting a home pay 1800 crowns a month more than those who own their home. At the same time, flats are rented mostly by people with lower income.
The total debt of Czech sat the end of June reached 2.38 trillion crowns, an increase of 6.7 percent in annual terms, according to the Banking and Non-Banking Client Information Register. At the same time, the amount of non-performing loans fell by 5.5 billion crowns to 31.4 billion crowns. The number of people who had difficulty repaying consumer loans fell by 61,000 to 215,000 year-on-year.
A preferential debt relief regime that now only applies to the elderly and
disabled will likely be extended to Czechs paying off debts incurred when
they were minors.
MPs voted unanimously on Wednesday to amend the Insolvency Act to allow the new category of debtor to be included in the preferential regime.
The amendment’s authors said that leading figures in the Senate had signalled its smooth passage in the upper house. If signed into law by the President, it could take effect in September.
An earlier amendment to the Civil Code would transfer debts of children under 15 to their parents or guardians.
Over 6,000 children in the Czech Republic are currently threatened with distraint orders while tens of thousands of young adults have debts carried over from childhood.
The Czech Republic’s total debt amounted to CZK 2.34 trillion at the end
of the first quarter of 2019, up by CZK 161.5 billion in annual terms,
according to the Czech Credit Bureau (CRIF) database.
The volume of non-performing debt fell by CZK 4.1 billion to CZK 32.4 billion. The number of people who had problems making consumer debt payments fell 17 percent year on year. The number of people who failed to pay their housing loans fell by 16 percent.
The average amount of short-term debt “at risk” stood at almost CZK 98,000 at the end of the first quarter of 2019. This concerns debts in which three consecutive monthly instalments were not paid or were declared due by the creditor.