Abstract:

In the last 20 years, the development of the economy and the need for own housing of the Czech population has been increasing, which is reflected in the increasing number of applications for housing loans. With the development of the economy, the overall indebtedness of economic entities is also increasing, confirming the trend of living on debt. Market developments have led to long-term interest rate cuts, with mortgage lending rates reaching a record low of 1.74% pa in 2016. As a result, even people with lower incomes were able to obtain a housing loan. Given that a similar situation preceded the past financial and mortgage crisis in the USA, the Czech National Bank has now tightened the criteria for granting mortgage loans.

The paper deals with the issue of these tightening criteria for the provision of mortgage loans, gradually implemented by the Czech National Bank since 2017. The main aim of the paper is to analyse the impact of introducing these stricter conditions on the mortgage market in the Czech Republic, on the average citizen and his/her ability to obtain a home loan, as well as the impact on the price of the loan, in particular the interest rate. In the paper are analysed housing loans in the form of mortgage loans and building savings loans. The paper seeks to quantify the impact of stricter criteria for granting mortgage loans on the creditworthiness of Czech citizens (i.e. their ability to raise and repay funds for their own property). Last but not least, the paper monitors the development of the housing market in the Czech Republic, the development of mortgage loans over time and interest rates on mortgage loans.