Recent data reveals a concerning surge in the level of indebtedness among Czech citizens, as reported by CRIF, a company operating credit registers in both the banking and non-banking sectors. In the third quarter of this year, the debt volume soared by 3.5%, reaching a staggering 3.26 trillion koruna. Concurrently, the volume of debt at risk due to non-payment witnessed a parallel increase, rising by 3.1% to reach 28.8 billion koruna.

Breaking down the categories, housing loans contributed significantly to the overall debt scenario, standing at 2.69 trillion koruna by the end of September. This represents a year-on-year increase of 2.8%. The consumer debt volume experienced a more pronounced surge, spiking by 6.9% to 565.5 billion koruna.

A particularly worrisome trend is observed among the youngest age group, individuals aged 15 to 24. Within this demographic, the average unpaid portion of consumer debt has seen a substantial increase of a quarter over the year, raising concerns about the financial well-being of this cohort. Jiří Rajl, the executive director of the Non-banking Client Information Registry, highlighted this issue.

The average consumer loan now stands at 243 thousand koruna, with the average due amount reaching 141 thousand koruna, indicating an 8% increase from the previous year.

Debt-related challenges have permeated all regions, with notable spikes observed in Central Bohemia (8.5% increase) and the Ústí region (8.1% increase). The Moravian-Silesian and Ústí regions face the highest proportion of inadequately repaid consumer debt, accounting for over five percent of the total volume.

While the volume of long-term debt continues to rise, the growth is notably slower than the previous year. Lenka Novotná, executive director of the Banking Registry, emphasized that the current increase is attributed to higher property prices and more expensive mortgages rather than an increase in the number of individuals taking out housing loans. The escalating debt scenario raises concerns about the financial resilience of Czech citizens and underscores the need for prudent financial management.

Article by Prague Forum