<csu>Households have already gone into debt for housing by a quarter of a trillion CZK</csu>

PRAGUE - The total debts of Czech households for housing amounted to 244.6 billion crowns by the end of August this year. This represents 72 percent of the total indebtedness of households, which reached 336.6 billion crowns at the same date. This is evident from the thematic analysis published today by the Czech Statistical Office.
Total household debt increased by more than 900 percent from 1993 to 2005. A positive phenomenon is the change in the structure of this debt. While until 2002, consumer loans had the highest dynamics, since then, mortgage loans have been growing the fastest. Their volumes have been increasing at an average annual rate of over 33 percent over the past seven years.
In 1997, loans for housing, that is, mortgage loans and loans from building savings, represented 24.9 percent of total household loans. By 2004, this figure had risen to 71.9 percent, and from January to the end of August this year, it reached 72.4 percent, which is more than 30 billion crowns. In May 2002, the volume of mortgage loans (40.1 billion crowns) was for the first time higher than the volume of loans from building savings (39 billion crowns).
The high share of housing loans reduces the risks for lending banks or other creditors. Borrowed money is used for a purpose that typically has a longer lifespan than the loan maturity. Therefore, the money is not consumed before the debtor pays it back. However, a risk for banks could be the overheating of the real estate market and the subsequent drop in prices, which would devalue the collateral on drawn mortgage loans.
The strong dynamics of housing loans brings the Czech Republic closer to the average in eurozone countries. The share of loans for purchasing a house or apartment in the eurozone is also increasing. From 67.1 percent in 2003, it rose to 69 percent in August 2005. In the Czech Republic, this ratio was 67.2 percent in 2003 and was nearly the same as in the eurozone. However, this August, housing loans for Czech households exceeded the eurozone average with a share of 72.4 percent.
Nevertheless, the Czech Republic is approaching the European Union more in its willingness to accept risk than in other proportions. In terms of the mutual ratio of deposits to loans in the household sector, the Czech Republic still has relatively significant room for growth in indebtedness. According to statistics from the European Central Bank, in August 2005, the total volume of household loans in the eurozone was almost the same as total household deposits - the share was 95 percent. In the Czech Republic, at the same time, loans to households from banks accounted for only 35 percent of their deposits in the banking sector.