Featured Product

    CNB Relaxes Credit Ratio Limits for New Mortgages Amid COVID-19 Crisis

    April 01, 2020

    In light of the impact of COVID-19 pandemic, CNB Bank Board has relaxed the limits on three credit ratios used in assessing applications for new mortgages. These ratios are loan-to-value (LTV), debt service-to-income (DSTI), and debt-to-income (DTI). The relaxation is effective immediately. In context the pandemic, CNB also regards the draft law on loan moratorium to be economically justifiable. In addition, the Bank Board decided to postpone the discussion of Financial Stability Report 2019/2020 by one month to June 18, 2020 and the report is expected to be published on July 08, 2020. This is to gain more time to better quantify the impact of COVID-19 pandemic on the domestic financial sector.

    Credit Ratio Limits

    The decision made by the CNB Bank Board includes the following:

    • The LTV limit on new mortgage loans has been relaxed from 80% to 90% and providers may apply a 5% exemption to mortgages with higher LTVs. The previous option to provide a maximum of 15% of the total volume of mortgages with an LTV between 80% and 90% has thus been abolished. The changes to the LTV ratio do not apply to "investment" mortgages.
    • The recommended limit on the DSTI ratio, which expresses what proportion of an applicant's net monthly income is spent on total debt repayments, has been increased from 45% to 50%.
    • The current limit on the DTI ratio has been cancelled. 

    Loan Moratorium

    The loan moratorium law is the second legislative change to have been made during the COVID-19 pandemic. CNB highlights that the moratorium will not only allow installments to be postponed quickly and simply, but will also make it unnecessary for banks and credit unions to increase their provisions for such loans due to this postponement. CNB will monitor how the moratorium affects bank portfolios in practice and what impact it has on their liquidity situation. After the moratorium expires, CNB will focus on assessing whether banks and credit unions categorize their loans appropriately and create sufficient provisions for these loans.


    Related Links

    Effective Date: April 01, 2020

    Keywords: Europe, Czech Republic, Banking, LTV, DTI, DSTI, COVID-19, Mortgage, Residential Real Estate, Loan Moratorium, CNB

    Related Articles

    BIS and Central Banks Experiment with GenAI to Assess Climate Risks

    A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe

    March 20, 2024 WebPage Regulatory News

    Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures

    Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.

    March 18, 2024 WebPage Regulatory News

    Singapore to Mandate Climate Disclosures from FY2025

    Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies

    March 18, 2024 WebPage Regulatory News

    SEC Finalizes Climate-Related Disclosures Rule

    The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.

    March 07, 2024 WebPage Regulatory News

    EBA Proposes Standards Related to Standardized Credit Risk Approach

    The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU

    March 05, 2024 WebPage Regulatory News

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8957