Work detail

Effects of LTV, DTI and DSTI ratios on retail mortgage market. Evidence from the Czech Republic

Author: Bc. Anna Mičková
Year: 2020 - summer
Leaders: Mgr. Magda Pečená Ph.D.
Work type: Bachelors
Language: English
Pages: 76
Awards and prizes:
Abstract: Abstract The thesis analyses the effects of credit-related borrower-based macroprudential measures - loan-to-value (LTV), debt-to-income (DTI) and debt service-to-income (DSTI) ratios - on retail mortgage market in the Czech Republic. These lending instruments, which target mainly borrowers and restrict the amount of money borrowed relative to the value of underlying collateral (LTV) or client’s disposable income (DTI, DSTI), represent a non-negligible part of macroprudential policy. This entry barrier should act in a preventive manner to protect borrowers from taking high-amount and high-risk mortgages and eventually curb excessive private sector leverage. After the introduction and implementation of limits in the Czech Republic, the supply of loans with risky parameters declined, the share of non-performing mortgage loans decreased, and the rise in house price index decelerated. In 2019, the volume of new mortgage loans declined by 13.6 % year-over-year compared to the previous year and the spiral between increasing credit financing of property purchases and rising property prices slightly weakened.


Česká Spořitelna


Patria Finance