 Payment Holidays, Credit Risk, and Borrower-Based Limits: Insights from the Czech Mortgage MarketMartin Hodula and Lukas Pfeifer Working Papers from Czech National Bank, Research and Statistics Department Abstract: The Czech Republic provides a unique setting to examine the effects of loan moratoria during the COVID-19 pandemic, as it combined broad-access legislative moratoria with stricter, eligibility-based bank moratoria. Using detailed loan-level data from the Czech mortgage market, we find that legislative moratoria were predominantly precautionary, addressing a wide range of borrowers, whereas bank moratoria were primarily utilized by higher-risk borrowers facing solvency challenges. Post-moratoria, we observe limited materialization of credit risk, which was nearly twice as high for bank moratoria compared to legislative moratoria. Stricter borrower-based regulations (LTV, DTI, and DSTI limits) implemented prior to the pandemic were associated with lower moratoria uptake and reduced post-moratoria arrears. These findings underscore the effectiveness of combining universal legislative moratoria with targeted bank measures to balance immediate economic relief and long-term financial stability. Keywords: Borrower-based measures; COVID-19 economic policy; credit risk mitigation; loan moratoria; mortgage arrears (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2025/1 Access Statistics for this paper More papers in Working Papers from Czech National Bank, Research and Statistics Department Contact information at EDIRC. |
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