Why Czech Mortgage Rates Are Rising Again. Even After Years of Expected Declines.

For several years, Czech mortgage borrowers have been expecting interest rates to decline. Inflation fell, the Czech National Bank gradually reduced its key rate, and mortgage financing became cheaper during 2024 and 2025.

But the downward trend has now reversed.

According to the Czech Banking Association's Hypomonitor, the average interest rate on new mortgages fell to 4.43% in March 2026. It then increased to 4.52% in April, 4.67% in May and 4.79% in June.

This does not mean that mortgage rates are returning to their previous peaks. It does, however, show that further reductions are not guaranteed.

Mortgage Rates Do Not Depend Only on the Czech National Bank

A common assumption is that mortgage rates move directly in line with the Czech National Bank's two-week repo rate.

The relationship is more complicated.

Most Czech mortgages have interest rates fixed for several years. Banks therefore price them primarily according to longer-term market rates, which reflect expectations about future inflation, economic growth and the cost of funding over the entire fixation period.

These market rates can increase before the Czech National Bank changes its own rate. Banks may initially absorb part of the higher funding costs, but they cannot do so indefinitely.

The Czech National Bank eventually increased its repo rate from 3.50% to 3.75% in June 2026. It was the first increase after several years of rate cuts and confirmed that inflationary pressure has not completely disappeared.

Strong Demand Is Keeping the Market Active

Higher interest rates have not stopped buyers from applying for mortgages.

Czech providers managed CZK 36.5 billion in new mortgages during June 2026, excluding refinancing. During the first half of the year, the total volume reached approximately CZK 216 billion which is approx CZK 66 billion more than in the same period of 2025.

Strong demand gives banks less reason to compete through aggressive rate reductions. At the same time, property prices continue to rise, particularly in Prague and other major cities.

This creates a difficult decision for prospective buyers. Waiting may eventually result in a lower mortgage rate, but the saving can easily be offset by a higher property price and a larger required loan.

Should Buyers Continue to Wait?

Waiting can make sense if the available property is unsuitable or if the monthly payments would place too much pressure on the household budget.

However, postponing a purchase solely because mortgage rates are expected to be substantially lower next year is becoming increasingly speculative.

The development during 2026 demonstrates how quickly interest-rate expectations can change. Even economists and financial markets cannot predict the exact bottom of the interest-rate cycle.

For buyers who find a suitable property and can comfortably afford the mortgage, it may therefore be more practical to proceed under today's conditions and retain the possibility of refinancing later.

A future reduction in interest rates can potentially be captured through refinancing. A lower historical property price cannot.

Preparation Is More Important Than Timing

This does not mean that buyers should rush into a purchase. The property price, financing conditions and legal documentation remain more important than trying to predict the next movement in interest rates.

Expats and applicants with foreign income should also be particularly careful. Czech banks assess foreign income, currencies, residency status and employment structures differently. The lowest advertised rate may not be available to every applicant.

Before signing a binding reservation agreement, buyers should know which banks can accept their income, how much they can borrow and whether the proposed financing timeline is realistic.

Mortgage rates may still decline again. The experience of 2026, however, shows that waiting for cheaper financing is not a risk-free strategy.

If you are planning to purchase or refinance property in the Czech Republic, we can assess your situation and compare the relevant financing options before you make a binding commitment.