The governor of the Czech National Bank decided to leave mortgage restrictions in place on Thursday, claiming that the Czech residential market is still overpriced. The conclusion is that neither the restrictions nor higher interest rates have succeeded in popping the real estate bubble. Banks will continue to provide mortgage loans only if the total amount borrowed isn’t more than nine times the borrower’s annual income and if the monthly installments don’t exceed 45 percent of their salary. The CNB is concerned that the prices are continue to separate from reality. A year ago, it estimates, prices were 10 percent over-valued, but it claims this had increased to 15 percent by the end of 2018. A new study commissioned by the Czech Banking Association suggests that despite higher interest rates, interest in mortgages is still substantial, with one in ten Czechs currently considering taking out one.
