International Property News

Prague - Household debt could top Kc900bn this year

19th February 2008

Debts of Czech households in banks and other financial institutions could exceed Kc900bn at the end of this year, which would be a 25 percent increase against 2006, according to GE Money Bank's estimates.

The growth in Czech household debt would therefore slow down slightly, Monika Kubovcova of GE Money Bank told journalists today. Data from the Czech National Bank (CNB) showed that the annual growth reached 35 percent in 2007 and 2006.

GE Money said household debt would account for 30 percent of gross domestic product in 2010, compared with 21 percent of GDP last year, and roughly a third of last year's average in the 12 countries of the euro zone.

Of last year's aggregate household debt of Kc726bn, loans for housing made up Kc511bn. The volume of mortgage loans provided rose by two-fifths against 2006 to Kc334bn. Other housing loans grew by a third to Kc177bn.

Credit card loans were 38 percent higher. They account for a small part of the household debt, though.

Consumer loans rose by a quarter to Kc115bn.

Next Finance analyst Marketa Sichtarova told CTK that her estimate is similar to that of GE Money Bank. "We may certainly reckon with a percentage slowdown of the growth," she said.

The slowdown will be seen for mortgage loans in particular. Mortgage loans become more expensive and economic growth has peaked already, said Sichtarova.