Czech millennials are struggling to get mortgages due to soaring rates

Home ownership is becoming an evaporating dream for a large percentage of young Czechs due to high mortgage rates. A recent survey conducted by financial management company Kruk and published by Czech News Agency among thousands of respondents has shed light on the growing unaffordability of mortgages for young people aged 25 to 34.

The study revealed that 23 percent of individuals in this age group find it impossible to secure a housing loan due to high interest rates. Additionally, even those who already hold mortgages now face the challenge of substantially augmenting their savings to accommodate escalating interest rates.

The survey underscores that the unavailability of mortgages disproportionately affects young adults between the ages of 25 and 34. Among other age groups, 79 percent of those aged 18 to 24, 79 percent of individuals aged 55 to 64, and 89 percent of those aged over 65 have not had to grapple with interest rate problems simply because they do not possess home loans.

A gender divide is also apparent, as women are more likely to be affected by the unavailability of mortgages. according to the survey, men exhibit a higher capability to manage increased repayments without strain after the end of the interest rate fixation. Households with two children are most frequently compelled to curtail their spending due to surging repayments.

Kruk Czech Republic and Slovakia CEO Jaroslava Palendalová highlighted some encouraging aspects of the survey.

"Only a negligible percentage of respondents have reported that the heightened installments of their mortgages are so burdensome that they are forced to sell their property [one percent] or resort to borrowing for installments within their family or from another institution [slightly over one percent]," she says. "Being in debt to repay other loans is highly risky and can lead to a debt trap."

The issue of mortgage accessibility is most pronounced among entrepreneurs, self-employed individuals, and residents of Vysočina and Hradec Králové regions.

"Paradoxically, the biggest problem with the availability of mortgages is reported by employees in the financial and insurance services sector, followed by individuals from the field of agriculture and forestry," Palendalová added.

"People working in the information technology and telecommunications sector encounter the least difficulties with repayment."

While the survey did not establish a fundamental link between mortgage availability and the level of education achieved, it did reveal that individuals with lower educational attainment experience more significant challenges in repaying housing loans, while university students encounter fewer difficulties.