The Czech National Bank (ČNB) wants to ban lenders from granting 90- or 100-percent mortgages on properties. The central bank explained that it wants to prevent another mortgage boom, and warned that home prices could go up very quickly. The bank is worried that in the case of a crisis, and a fall in residential prices, clients might lose their ability to meet their monthly mortgage payments, leaving banks with properties worth less than the loans.
On the Czech market, 90- or 100-percent mortgages make up just 15 percent of the total volume. However, the ČNB warns that the situation might change quickly if banks step up their fight for market share. In Sweden, for example, mortgages can cover only up to 85 percent of the property value. Such rules have slowed the increase of mortgage volumes and stabilized the financial sector, Jakub Seidler, the chief economist at ING, told Hospodářské noviny.
