Rising Debt Among Czechs: A Closer Look at Consumer Borrowing Trends

In recent years, Czech citizens’ borrowing habits have significantly shifted. After a brief period of deceleration, the trend of increasing debt among Czechs has started to pick up pace once again. A significant proportion of the new loans are primarily for consumption, with mortgages still accounting for 83% of the total debts. The most notable increase in borrowing and repayment challenges has been among the younger generation, up to 24. This information is derived from data compiled by the banking and non-banking registers by CRIF – Czech Credit Bureau.

In the first quarter of this year, the Czech population’s debt increased by 5.6% year-on-year to 3.36 trillion crowns. Housing loans increased by 5.4% to 2.78 trillion crowns, and consumer loans increased by 6.6% to 577 billion crowns. Consumer debt at risk of default increased by a tenth to 25.5 billion crowns.

Economist Jakub Seidler from the Czech Banking Association explains this rise in household debt as primarily due to increased credit activity, including the recovery of the mortgage market and higher activity in consumer loans.

Interestingly, the short-term debt volume has slightly decreased quarter-on-quarter but has seen an almost seven-percent increase compared to last year, reaching 577 billion crowns at the end of the first quarter. There has also been a slight increase in the number of debtors, by 1.4% to 2.33 million. The average amount per debtor increased by five per cent to 247 thousand crowns.

The fastest increase in consumer debt at risk of default has been among individuals aged 15 to 24 years, up by 26% to 1.5 billion crowns despite a lower number of defaulting clients. The average unsettled amount in this group has also significantly increased by 27% to 112 thousand crowns.

In conclusion, a shift in borrowing trends in the Czech Republic is evident, with a noticeable rise in debt levels, particularly among the younger demographics. As consumer confidence increases and interest rates decrease, Czech households are taking on more debt, a trend that appears likely to continue.