Czech central bank asks lenders to apply lower exposure limit on investment mortgages

Erste Bank AG

27/11/2025 14:30

PRAGUE, Nov 27 (Reuters) - The Czech central bank recommended lenders limit their loan-to-value exposure in mortgages provided for purchases of property meant for investment purposes to 70% versus the standard rate of 80%, the bank said on Thursday.

Banks should also apply a limit of debt-to-annual income of 7x, versus 8x for standard mortgages, the central bank said.

Czech real estate price have been growing strongly on limited supply and continued interest in investments into the sector.

"Activity on the mortgage lending market has exceeded long-term averages, residential property prices are increasing at double-digit rates and the share of investment mortgages for the purchase of residential property is also rising," board member Jakub Seidler said in a statement.

"The recommendation applies to a relatively small part of the mortgage market and is aimed at preventively mitigating some emerging risks at their initial stage."

The bank left other limits on lending unchanged at a meeting on financial stability issues.

It said the banking sector as a whole remained resilient, and left the countercyclical capital buffer for banks at 1.25%.

 (Reporting by Jan Lopatka
Editing by Jason Hovet)

 ((jan.lopatka@thomsonreuters.com; +420 234 721 614; Reuters Messaging: jan.lopatka.thomsonreuters.com@reuters.net))