Czech National Bank in reaction to the coronavirus spreading has adjusted the conditions for mortgage lending

After the Board of the CNB decided to liberalize some of the limits last week, more applicants have higher chance to fulfill the requirements for obtaining the mortgage loan.

Following measures were changed:

• Loan to value indicator LTV was increased up to the 90% (from 80%). It means bank will borrow you 90% of the purchase price of the property, therefore you required to have only 10% of your own savings.
• The upper limit on the debt service-to-income DSTI ratio is nowadays 50% (before it was 45%). Successful mortgage applicants should not be spending more than 50% of their net monthly income on loan repayments.
• Limit on the debt-to-income ratios DTI is no longer applicable. Before the pandemic applicant's their overall debt should not exceed nine times their net annual income.

In order to prop up the Czech economy affected by the pandemic, CNB not only reduced the standard mortgage requirements, but also reduced base interest rate twice within March.

Also some commercial banks reacted to basic interest rate reduction by lowering their mortgage interest rates and offering favorable mortgage loans.