Czechs are increasingly finding ways to take out loans for free, including mortgages, which is raising concerns among creditors and regulators about the consequences of this practice.
In recent years, many Czechs have discovered a method to obtain loans, including mortgages, completely free of charge. This trend is causing alarm among lenders, who report a rapid increase in these cases, which they claim could have significant implications for the financial stability of the borrowing market. Financial institutions are warning that this practice of exploiting loopholes in loan agreements could lead to broader economic issues if not addressed promptly by regulators.
A notable case is that of Jaromír from South Moravia, who took out three loans totaling 157,000 crowns between 2023 and 2024. After repaying these loans, he approached the financial arbitrator to cancel the agreements, arguing that his creditworthiness was not properly assessed. This resulted in him receiving over 60,000 crowns back, effectively allowing him to borrow money without any costs, raising questions about the adequacy of risk assessment practices by lenders.
Financial authorities, including the Ministry of Finance, have indicated that while they are aware of the rising trend, measures to combat it will be limited. The increasing number of cases where borrowers take advantage of perceived flaws in the lending system indicates a growing need for adjustments in regulatory practices to ensure that lenders are conducting robust evaluations of borrowers' abilities to repay loans, ultimately protecting both the financial sector and consumers from potential fallout.
