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What affects the availability of mortgages

What affects the availability of mortgages With its recommendations, the Czech National Bank (CNB) has gradually reduced its maximum mortgage to 90% of the mortgage value (LTV). In June, however, it came up with other limitations where banks also recommend prudent assessment of the DTI or DSTIs ratio. Practical calculations show that LTV constraints remain the most crucial in terms of availability of mortgages, and efforts to prevent funding from other sources.

From April banks may provide mortgages up to 90% of the value of the pledged property. This follows from the recommendations of the CNB, which further stipulated that the proportion of mortgages in the range of 80 to 90% of LTV should not exceed 15% of the volume of contracted mortgages.
In June, the CNB further recommended stricter credit ratings . In particular, banks should evaluate debt-to-income ratio (DTI) and debt service-to-income (DSTI) ratios. "The CNB Providers are urging them to 'especially prudently' assess the ability to repay the loan, with the DTI indicator being higher than 8 and DSTI above 40%," said David Eim (Gepard Finance). In connection with the limitation of LTV, the CNB also declared unacceptable parallel lending for real estate refinancing. "The CNB considers providing any consumer credit secured and unsecured with the same and another provider for circumventing LTV restrictions," adds David Eim.


Example: Mortgage financing at current restrictions

The specific effects of the limitations can be demonstrated in the example example.
We are thinking of a family with two children where the husband has a monthly gross income of 40 thousand. CZK (25 thousand + 15 thousand). As far as their liabilities are concerned, they have a smaller loan (CZK 50,000) with a monthly repayment of CZK 2,500 and a credit card with a limit of CZK 20,000. CZK. They have 350 thousand. CZK.
Such applicants are likely to be successful at the moment of claiming a mortgage of up to CZK 3.1 million, while in the case of real estate worth CZK 3.5 million, the ceiling will be 90% of LTV. Bonitously it's on the edge, however real. The monthly installment would be about CZK 11,440.
A loan of about 2.5 million would be real with most banks. The monthly installment would be about CZK 9,230.
The DTI indicator reaches the following values ​​(with annual revenue of CZK 480,000):
Mortgage CZK 2.5 million: 2,500,000 / 480,000 = approximately 5.2.
Mortgage CZK 3.1 million: 3,100,000 / 480,000 = approximately 6.5.
The DSTI indicator achieves the following values:
Mortgage CZK 2.5 million (expenses: CZK 9,230 + CZK 2,500 = CZK 11,730): 11,730 / 40,000 = about 30%.
Mortgage CZK 3.1 million: (expenses: CZK 11,440 + CZK 2,500 = CZK 13,940): 13,940 / 40,000 = about 35%


It can therefore be seen that in both cases, the sample families would not touch the current constraint. "We would probably be able to find a situation where the client, according to the new rules, will not go as high as the old rules, but it will not be a crucial thing," remarks David Eim. "It is all the more important to limit LTVs and try to avoid the possibility of financing from other foreign sources," David Eim adds, with measures that may lead to a situation where clients will try to finance themselves from sources beyond the control of banks, The risk situation will only get worse.


Source: tz, Lesensky.cz, redacted



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