Mortgage Market in Czechia Grows, But Affordability Concerns Persist

The Czech mortgage market is showing signs of renewed activity after several years of slowdown, though high property prices and repayment burdens continue to weigh on households.

According to data from the Czech Banking Association’s Hypomonitor, banks and building societies issued housing loans worth CZK 37.5 billion in June 2025, up nine percent from the previous month. Of this, about CZK 29.4 billion were new mortgages, with the rest linked to refinancing and refixations. The average mortgage rate on new contracts edged down to around 4.6 percent, continuing a gradual decline since the start of the year.

The total value of new mortgages provided in 2024 reached CZK 228 billion, nearly double the level recorded in 2023. When refinancing is included, the market volume stood at approximately CZK 275 billion. Despite this rebound, overall mortgage activity remains below the peak years of 2020 and 2021, when ultra-low interest rates fuelled record demand.

Affordability remains a key challenge. Recent studies show that purchasing an average apartment in Prague requires the equivalent of 13 to 14 years of average wages, placing the city among the least affordable housing markets in Europe. Analysts point to slow construction processes, high material costs, and long permitting times as key structural barriers.

Many households continue to postpone mortgage decisions, with cost of living pressures and concerns about repayment cited as main reasons in surveys. At the same time, a significant share of existing mortgage holders face refinancing in the coming years, as low fixed-rate deals agreed during the pandemic period expire. According to the Czech National Bank, “other new mortgage agreements” — typically refixations or refinances — now make up a large share of total lending, reflecting the adjustment to higher rate conditions.

While activity is picking up and interest rates are gradually easing, market observers say a meaningful improvement in affordability will depend on both wage growth and measures to accelerate residential construction. Until then, housing finance will remain a major source of financial strain for many Czech households.