PRAGUE, Aug 25 (Reuters) - The Czech central bank will not get the power over the country’s mortgage market it wanted to deflate a bubble it sees developing in the housing market.
Lawmakers dropped a bill on Friday that would have extended the authority of the Czech National Bank (CNB), citing the approach of parliamentary elections set for Oct. 20-21.
“As there are elections ahead, the caucuses did not want to deal with it now, because it is controversial,” Jaroslav Klaska, deputy chairman of the budget committee and a supporter of the bill, told Reuters in a phone interview.
The central bank has said repeatedly that Czech property prices seem overvalued and recommended banks adjust lending policies accordingly. The subject surfaced in the debate on Aug. 3 at which it decided to raise interest rates for the first time since 2008.
Since April, the bank has recommended that mortgages should not exceed 90 percent of property values and that no more than 15 percent of customers should be given loans worth more than 80 percent of a property’s value. The bill that parliament dropped would have given the central bank authority to cap loans according to debt-to-income, debt servicing-to-income and loan-to-value ratios.
“The bill has regrettably fallen victim to the election campaign,” central bank spokeswoman Marketa Fiserova said.
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5th March 2019