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Mortgage Payments Doubled. How Czech Families Cope With the Crisis

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Monthly mortgage payments have become a source of family drama for three families whose stories are being followed by Seznam Zprávy in a unique project. The situations differ: one family decides to sell their remaining property, while another family experiences tension leading to quarrels.

Radek, a businessman from Pardubice, shares his story of limited success. His mortgage payments were set to increase from 16,500 to 35,500 CZK per month. After negotiation, he managed to secure a discount of 3,500 CZK. However, he doesn’t view it as a victory. Radek explains, “It’s nothing. Right now, we have 32,000 CZK… The main issue is that when they granted us the loan, they checked if we could afford it. And now there’s such a sudden jump.”

An entrepreneur from Pardubice mentioned that his family’s monthly income after taxes is around 50,000 CZK. However, with the increased mortgage, their expenses amount to approximately 68,000 CZK. As early as spring, the family had already made cutbacks and abandoned plans for house renovations, which would have allowed the grandmother to move out.

“It wasn’t enough,” he recalls their cost-saving measures in June. Consequently, they had to consider a more drastic solution.

Petr’s family resides near Prague, and he is awaiting a salary increase from 30,000 to 40,000 CZK, which is expected to happen after summer vacations. Petr, employed in public administration, acknowledges that this situation has created increasing tension at home.

In a previous episode, he revealed his wife’s desire for a second child. “She insists on having a second child, without considering the challenging times,” he explained. Although they both make efforts to cope, the mounting pressure leads to conflicts.

The third family, based in Liberec, faces the smallest increase in their mortgage payments, rising from 4,600 CZK to 5,600 CZK. Additionally, Frantisek utilizes his salary to support his retired father and sister, who are going through difficult times. He also worries about how the government’s announced consolidation package will impact his loved ones. Frantisek shares his concern, saying, “I’m not worried about myself, but I expect my sister and father will need more assistance. Who knows if something will happen this year,” referring to the government’s plans. Therefore, he adopts an austerity mindset while waiting to see how events unfold.

Radek, the businessman from Pardubice mentioned earlier, acquired a 5 million CZK mortgage in 2018 with a repayment period of 27 years. He now feels trapped in a vicious cycle. As an entrepreneur, he strives to increase his income, but notes that people are no longer spending money as they used to.

“People aren’t buying; they’re saving. They’re scared,” he expresses with despair. Radek blames the government, asserting that their attempts to save money are causing market instability.

Currently, Radek’s family is using their financial reserves to cover the mortgage. However, he has taken the drastic step of selling the second property, originally occupied by his daughter. Despite having the house on the market for two months, he laments that the inability of people to secure mortgages has resulted in no interested buyers. Radek has even reduced the price below the market value, offering it for 8.5 million CZK instead of the typical 10-12 million in the area.

Meanwhile, Frantisek and his wife prioritize paying off their mortgage as quickly as possible instead of renovating their kitchen and bathroom. In 2007, Frantisek took out a 900,000 CZK.

He came up with the idea after doing some calculations about loans for possible renovations. “It came out that I would be paying absolutely astronomical amounts, that I would be paying twice as much as I was borrowing. So I dismissed the idea right away,” he says.

In March, Petr from Central Bohemia said he had to go to a meeting with his bank to find a solution when he couldn’t afford to increase his mortgage. He works in public service and his wife works part-time. So they don’t have much change in income. At home, he uses energy-saving measures as much as possible: he uses rainwater, has solar panels, and he heats with a furnace. But he’s not going to meet with the bank until June. “I’m not going to let the case slide, I’ll set up a meeting with the banker, but I don’t think he’ll find a way out. I don’t know what we’re going to talk about. However, I am looking for a solution and want to warn you in advance that I will have problems,” says Peter. He mentally prepares himself for the different options he will get from the bank.

“I don’t know what will happen. If they tell me they’ll wait six months and they want me to sell the property – I don’t think that’s an option. Not for me, not for them, when I paid them 30,000 for five or six years with no problem,” he describes his fears. He hopes the government won’t let the families down and do the same thing it did last year during the electricity and gas price increases.

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