"The popularity of consumer loans that do not require a guarantor has been increasing over the past several years," said Petra Davidová, a financial stability analyst at the Czech National Bank.

This month banks reported a dramatic increase in so-called American mortgages — loans that use the value of borrowers' property as collateral. "American mortgages can provide a much larger loan with the same conditions and offer lower interest rates," said Davidová.

However, while banks are willing to provide hefty sums in loans guaranteed by property, which thus imply a low risk, individuals may be unwittingly putting a lot more at stake if they find themselves in a personal financial crisis and unable to repay the loans, analysts say.

"Czech households as a whole are not overburdened with debt but already there are individuals who can find themselves in a precarious situation," Davidová said.

Cost of the bet

In spring 2004, Czech banks began offering American mortgages. Since then there has been a dramatic increase in the popularity of the product, according to bank officials.

According to Česká spořitelna spokeswoman Helena Matuszná, during the first few months, the bank wrote a few dozen American mortgages monthly. Now it writes hundreds. Since the first of the year through July, Česká spořitelna provided 2,673 American mortgages for a total of 1.4 billion Kč ($58.5 million).

The biggest attraction of the loans is that they make larger sums available than an ordinary consumer loan. They also come with no guarantor and a longer due date that can be extended for as long as 15 years. The loans can also be repaid any time before the due date without penalty.

Analysts say that the money is usually reserved for making a considerably large payment such as buying a car or financing an education abroad. Another common reason for wanting the money is to start a business.

"A self-employed person can hardly get a regular bank loan, so an American mortgage is an easy option for raising big money to invest in business," Davidová said.

She added that while putting one's property at stake may be a sizeable risk for an individual, the trend represents no danger for the country's economy, as banks have their money covered by the property.

Consumer loans in general represent a minor part of the Czechs' average household debt, according to Martin Kupka, chief economist at ČSOB.

"While there is a possibility that in the beginning there will be a certain percentage of people who will default on their debts, this number will not be very high," Kupka said.