In recent years, consumer debt among Czechs has been on the rise, reflecting shifting borrowing trends. According to data from the Czech Credit Bureau (CRIF), the total debt of Czech households increased by 5.6% year-on-year to 3.36 trillion crowns in the first quarter of 2024. This includes a 5.4% rise in housing loans, now totaling 2.78 trillion crowns, and a 6.6% increase in consumer loans, amounting to 577 billion crowns. The most notable surge in borrowing has been among younger individuals aged 15 to 24, whose debt at risk of default rose by 26% to 1.5 billion crowns.

Economist Jakub Seidler from the Czech Banking Association attributes this increase to a revival in credit activity, particularly in the mortgage market and consumer loans. He notes that the volume of short-term debt has slightly decreased from the previous quarter but has seen a nearly 7% increase from last year. The number of debtors has also risen by 1.4% to 2.33 million, with the average debt per person increasing by 5% to 247,000 crowns.

This trend is influenced by several factors, including increased consumer confidence and lower interest rates, prompting more Czech households to take on debt. Despite the rising debt levels, there has been a slight reduction in the number of debtors facing repayment challenges, although the total amount of debt at risk of default has grown by 10% to 25.5 billion crowns.

Younger Czechs, in particular, are experiencing higher levels of indebtedness, with significant increases in both the number of defaulting clients and the average unsettled amounts. This demographic shift suggests that younger individuals are increasingly reliant on borrowing, possibly due to economic pressures and lifestyle aspirations.

Overall, the rise in consumer debt among Czechs reflects broader economic trends and the evolving financial behavior of households. As borrowing continues to grow, it highlights the importance of responsible lending practices and financial literacy to ensure sustainable debt levels.

Article by Prague Forum