Fixed vs. variable rate — what's the difference and which to choose

Almost every mortgage in Czechia uses a fixed rate for 1–10 years. Variable rates exist but are rare — and in 2026 they make sense only in a specific situation.

Fixed rate — certainty at the cost of higher rate

You agree with the bank on a rate (e.g. 4.49 %) for a fixed period (typically 5 years, sometimes 1, 3, 7 or 10). For that period the rate does not change, regardless of what's happening in the market.

Pros: predictable payment, planning certainty, protection against rate increases. Cons: if rates fall, you're stuck with the higher rate; if you want to refinance early, you pay a penalty.

Variable rate — risk and opportunity

The rate changes monthly or quarterly based on a base rate (typically PRIBOR + bank margin). When ČNB lowers rates, your payment drops. When ČNB raises rates, your payment goes up.

Pros: often a 0.3–0.5 % lower starting rate compared to fixed, possibility of a payment drop. Cons: high risk, hard to plan, payment can rise sharply.

Concrete numbers for 2026

In 2026, the typical fixed rate (5-year fixation) is around 4.5 %, while variable runs 4.0–4.2 %.

On a 4-million-CZK mortgage for 25 years:

• Fixed 4.5 %: payment 22,253 CZK/month
• Variable 4.0 %: payment 21,108 CZK/month (saving 1,145 CZK/month)

If ČNB raises rates by 1 % in 2 years, variable jumps to ~5 % and the payment to 23,400 CZK — by then you're paying more than the fixed rate. This is the variable trap.

Which to choose in 2026

Fixed makes sense for almost everyone. Most Czech mortgages (95 %+) use it. Pick a 5-year fixation as a sensible compromise: long enough for stability, short enough to refinance if rates drop.

Variable only makes sense if: you're sure ČNB will keep cutting rates AND you have a reserve to absorb a possible payment increase AND you want to repay early (variable usually has no early-repayment penalty).

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