In the first half of this year, the unpaid debt of the Czechs increased by 6.4 percent year-on-year to 29.2 billion crowns. This is the highest growth of this indicator in ten years of keeping statistics. The total indebtedness of the population rose by 2.6 percent year-on-year to 3.22 trillion crowns. The payment morale of the Czechs began to deteriorate slightly. Over 25,000 people have new overdue debt, ten percent more in half a year.
At the same time, the volume of unpaid long-term debt decreased by 3.7 percent year-on-year to 5.1 billion crowns. The overall growth was thus caused by unpaid short-term debt, the volume of which grew by 8.7 percent to 24.1 billion crowns.
“It’s definitely a warning sign at the very least, because these changes happened in a very short time. On the other hand, inflation is slowly decreasing and forecasts are for an early economic recovery, so the deterioration can only be temporary. I definitely don’t see the situation as alarming yet, but there is a need take it into account,” pointed out the Executive Director of the Non-Banking Register, Jiří Rajl.
At the end of the second quarter, 174,000 borrowers defaulted on their short-term loans, 0.7 percent more than last year. The average outstanding amount was 138,500 crowns, 7.9 percent more than a year ago.
The volume of outstanding consumer debt increased in all age categories, the most among people aged 30 to 34 (by a fifth). At the same time, the total volume of loans for consumption is also growing the fastest for this age category. The volume of unpaid debt increased in all regions, the most in the Central Bohemian and Pardubice regions.
The volume of housing loans reached 2.67 trillion crowns in the first half of the year and increased by two percent year-on-year. The volume of consumer debt amounted to 554.5 billion crowns and grew by 5.4 percent.
A fundamental trend is a significant slowdown in the rate of indebtedness with long-term loans. Even last year, the volume of housing loans increased by up to 18 percent year-on-year. “This is mainly due to the low interest in mortgages, which are almost unaffordable for many groups of residents due to high interest rates and high purchased real estate prices,” said Lenka Novotná, executive director of the Bank Register.
The average amount of long-term debt was 2.5 million crowns at the end of June, 4.9 percent more than a year ago. There are 1.07 million people in long-term debt in the Czech Republic, which is 29,000 less than last year. The volume of long-term loans increased slightly in all regions except Prague, where it decreased by 0.2 percent.
Short-term debt is growing significantly faster. The average amount per borrower reached almost 240,000 crowns, ten thousand crowns more than a year earlier. The number of borrowers with consumer loans also increased, by 18 thousand to 2.31 million people. The volume of short-term debt increased in all regions, the most in Prague, by 7.4 percent.
Payment morale is also slightly deteriorating
The payment morale of the Czechs began to deteriorate slightly. In the second quarter of this year, the member companies of the Solus association registered more than 25,000 new overdue debts in the register of natural persons, ten percent more than in the second quarter of 2022. Approximately half of these people already had an earlier overdue debt recorded in the register. Since the beginning of 2023, 52,000 people have been entered into the register with overdue debt, reported the association Solus, which provides its members with access to information about people with difficulties in repaying their obligations.
At the end of the first half of the year, 4.56 percent of adults had overdue debt, at the end of March it was 4.8 percent, and at the end of 2022 it was 4.9 percent. However, the decrease was caused by an increase in the number of Czechs in the calculation of the Solus index, which reduces the resulting share of people with overdue debt in the total population. A significant group of Czechs registered in the Solus register of natural persons is also trying to pay off their obligations or part of them.
“Data on the overdue amount may be processed in the register of natural persons for the period during which the consumer’s obligation lasts. If the consumer’s obligation has ended otherwise than by repayment, or in the case of a time-barred obligation or an obligation from which the consumer has been exempted from payment, information about such obligation in the register for a maximum period of three years from the termination of such an obligation. That is why some debts are written off without actually being fully paid,” said the association’s secretary, Jan Stopka.
In particular, as a result of changes in the credit and client portfolios of member companies, the number of registered people with overdue debt fell from 423,000 to 408,000 during the first half of the year. The overdue amount recorded in the register fell during the first half of the year at least, from 30.9 to 30.7 billion crowns.
Enrollment in the Solus register primarily protects consumers from further irresponsible indebtedness. However, it also motivates them to pay their obligations when they are due, if they want to have access to another loan or other service with deferred repayment under favorable conditions. Solus brings together over 50 companies that provide services to consumers regarding bank loans and building savings, non-bank loans, telecommunications services and energy distribution.
2023-08-17 15:53:30
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