Construction interest has almost quadrupled since the beginning of the year: costs for real estate loans are skyrocketing | money

According to the comparison portal Check24, the interest on a construction loan almost quadrupled from January to June.

The average interest rate for ten-year home loans rose from 0.8 percent at the beginning of the year to 3.0 percent last month, the portal announced on Thursday. An increase to four percent by late summer is possible.

In the case of construction financing of more than 400,000 euros, the increase from 0.8 to 3.0 percent means higher costs of around 78,800 euros by the end of the ten-year term for borrowers, Check24 calculates.

The monthly rate for house or apartment buyers increases in this example from 933 euros to 1667 euros.

The comparison portal recommends consumers with ongoing financing to use the special repayment in order to keep the remaining debt as low as possible at the end of the term.

Also, they might have offers for so-called Forward loan check to secure today’s rates for the future.

This costs a forward premium at most banks, an average of 0.01 percent for each month until the loan is paid out.

The new building rate trend barometer

Meanwhile, there are signs of a slight market easing:

After the sharp increase in construction interest rates in the first half of the year, Germans can hope for a slight relaxation. This is reported by Interhyp, Germany’s largest broker for private construction financing.

In June, 10-year loan terms had risen more than 0.5 percentage points in a month to peak at 3.4 percent, but rates are now hovering around 3.3 percent again.

“Expectations of the next interest rate hikes are already largely priced in and concerns about the economy are becoming increasingly important. They have a braking effect on the rise in interest rates,” says Mirjam Mohr, board member for private customer business at Interhyp AG.

However, the experts surveyed monthly in the Interhyp building rate trend barometer consider a fundamental trend reversal to be unlikely this year. They expect interest rates to remain more or less constant over the next few weeks.

However, the majority is forecasting rising interest rates for the first half of the year and for the year. Interhyp expects a moderate increase to 3.5 to 4 percent for ten-year loans by the end of the year.

According to Interhyp, interest rates have visibly exceeded the 3 percent mark in recent weeks and are already higher than they were 10 years ago.

“The tripling in interest rates since the beginning of the year, which is equally painful for those interested in real estate and for follow-up financing, is partly due to the changed monetary policy course of the central banks. With the tighter monetary policy, they want to put a stop to the historically high inflation that was triggered by the corona pandemic, the Ukraine war and delivery problems,” explains Mirjam Mohr.

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