With the abolishment of the DSTI parameter, which used to put a leash on mortgage lending, we now find ourselves pondering the potential repercussions of this decision. The DSTI parameter, which once constrained the lending landscape, has been unshackled by the Czech National Bank (CNB). This move, effective from July 1, 2023, is set to revolutionize the rules governing mortgage loans, heralding a new era for aspiring homeowners.
However, it’s worth noting that banks‘ creditworthiness criteria and other parameters like DTI and LTV remain unchanged. So, while this change may not revolutionize the entire Czech mortgage market, it will undoubtedly bring relief to many individuals seeking larger mortgages.
Over the past year, mortgage applicants have faced challenges in securing the desired loans due to high interest rates. However, the Czech National Bank (CNB) is now introducing a new initiative by relaxing the DSTI parameter to stimulate the market. Starting in July, banks will no longer be bound by the DSTI parameter, which calculates the ratio between the applicant’s monthly debt repayments and their net monthly income. How each bank responds to this change remains uncertain and individual.
The DSTI limit was abolished from the beginning of the summer holidays. Experts estimate that loosening this key credit indicator could lead to an increase in property sales as more people might opt for mortgages.
Nevertheless, if you find yourself unable to secure a mortgage or are unable to provide proof of income, there are other avenues to consider, such as cooperative financing.
Banks take these credit indicators into account for new loans. For refinanced loans (or continuing mortgages after the fixed rate period), these indicators are used only if the original loan is increased (varying from bank to bank).
Currently, banks can make exceptions for applicants they believe will have no trouble repaying the loan in the future. This applies to 5% of the total volume of mortgage loans they provided in the preceding calendar quarter. These applicants may benefit from a 50% DSTI limit (instead of 45%) if the bank allows it.
In conclusion, the decision to rent or invest in your own property depends on individual circumstances and preferences. Taking out a mortgage does not mean a lifelong commitment; life’s paths are diverse, and financial situations may change. Ultimately, investing in your own property offers stability and potential for growth, giving you the freedom to create a home according to your vision. Trust in life, believe in yourself, and embrace your unique journey.
If you are considering a mortgage, I am here to guide you and provide insights into financing options and property purchases. If you’re curious about your credit capacity and how much you can avail yourself of from July 1, 2023, feel free to get in touch. Feel free to explore my references if you have the time.
Everyone has a different story, I am here professionally and personally for all those who need my assistance. For the past 10 years, I have specialized in real estate financing, mortgages, and loans. Check my reviews. My service is free for you.