Recommendations of the Czech National Bank

The continuing increase in the number of bank loans provided in the Czech Republic has drawn the attention of the Czech National Bank (CNB), the regulatory body obliged to maintain and support financial stability. The CNB has therefore published a number of recommended industry guidelines regarding mortgage lending conditions.

In particular, lending limits have been suggested relating to loan-to-value ratios (LTV); debt-to-income ratios (DTI); and debt service-to-income ratios (DSTI). In the opinion of the CNB, these limits need to be observed in order to minimise risks connected with the growing economic market.

In 2015, CNB issued its first recommendation on managing the risks associated with providing retail secured residential property loans. This was aimed at preventing risks associated with the residential property market by setting LTV limits. In 2016 and 2017, the CNB continued to tighten LTV limits; DTI and DSTI levels were also introduced.

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The UK Parliament voted twice to defy its government last week. First, they rejected the government’s negotiated terms for leaving the EU. Second, they voted that the UK cannot leave the EU without a negotiated agreement. Since the EU has declared they will not improve the terms rejected by the first vote, it appears that the UK can neither accept any agreement nor accept that there is no agreement. Brexit is, officially, an utter mess.

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