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Current Mortgage Market Situation and Outlook for 2025

May 2025 / 

After several years of sharp interest rate hikes, the Czech mortgage market is experiencing a gradual easing in 2025. The lowest available rates are currently around 4.39% per annum, while the average rate on newly arranged mortgages stands at approximately 4.68%. Compared to the previous year, this represents a modest decline, which is positively impacting the affordability of home financing. The most noticeable reductions are seen in mortgages with short-term fixed rates (1–3 years), while long-term fixed rates remain higher due to continued economic uncertainty.

Demand for mortgages is beginning to rise again — banks have reported an increase in the volume of new loans during the first months of the year. This trend is supported not only by lower rates but also by the loosening of certain restrictions previously set by the Czech National Bank, such as the DTI limit (debt-to-income ratio). Offers from individual banks vary significantly, so clients are encouraged to compare and consider special products — such as so-called “green mortgages” offering better rates for energy-efficient properties.

The outlook for the remainder of the year is cautiously optimistic. Given the anticipated reduction in the Czech National Bank’s base rate, mortgage rates could continue to decrease slightly, though a return to the "golden era" of 2% rates is not expected anytime soon. We forecast that rates in 2025 will mostly remain between 4–5%, which still represents higher costs compared to the past, but no longer poses the same barrier as during the peak of inflation.