Market-Based Housing Finance Efficiency in the Czech Republic

Petr Sunega, Martin Lux

Abstract:

The article aims to analyse housing finance efficiency in the Czech Republic, especially so called ‘intermediation efficiency’. ‘Intermediation efficiency’ applies to a set of institutional factors, risks (such as interest rate, credit and liquidity risks), government subsidies and legislative conditions that affect the cost of intermediating housing loans.

The methodology of the research combined quantitative and qualitative surveys among mortgage lenders and housing-savings banks in the Czech Republic with an analysis of secondary data. The purpose of the research was to get an idea about how efficient the market-based housing finance in the Czech Republic is and to point out its potential weaknesses and shortcomings. Despite several shortcomings described in this article, the ‘intermediation efficiency’ of financial institutions providing housing loans in the Czech Republic could be considered relatively high.