Banking

Young Czechs could see more accessible mortgages

The Ministry of Finance has submitted to the Government an amendment to the Act on the Czech National Bank (CNB), which would facilitate access to mortgages for young Czechs under 36 years of age. To buy their own homes, young Czechs could borrow up to a hundred percent of the value of the estate, and their income could be lower compared to current requirements.

If the government approves the proposal and if it passes through Parliament, young people will be allowed to take a mortgage loan up to ten percentage points above the limit set by the CNB. They could then spend up to five percent of their income more than older people to repay the mortgage. The young people´s total mortgage could also be higher compared to older applicants.

It is a significant change. So far, in its recommendations to the banks, the CNB requires the banks to provide mortgages of at most 80 percent of the value of the estate and 90 percent to a limited number of applicants. Since October 1st last year, the mortgage repayments may not exceed 45 percent of the applicant's monthly income. Originally, the CNB has required to be able to set the same conditions for all applicants.

The proposal of the softer parameters for people under 36 years of age should only apply to those who want a mortgage to buy housing.

The change is the result of a new agreement between the Ministry of Finance and the CNB. "We managed to find a compromise so that the amendment could be submitted to the government and then to the Chamber of Deputies as soon as possible," said Markéta Fišerová, CNB spokesperson.

The proposal is the victory of the argument of The Czech Fiscal Council, which opposes the strict conditions for achieving a mortgage. The Council believes that strict conditions would lead to an aging population, as young people would have to save more to achieve a mortgage and delay parenthood for this purpose.

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