On average, prospective buyers are borrowing ever larger sums to purchase their home. Fallen interest rates and overall only modest increases in real estate prices stimulated the market, according to experts.
The trend towards larger real estate loans will continue in the new year. In March, the average loan amount rose, according to data from credit broker Dr. Small at 299,000 euros. This is the highest value since August 2022.
“The current sideways movement in building interest rates, the inflation that has fallen since November 2022 and is now quite stable, as well as the property prices that fell until mid-2023 – and have not yet risen again in many places – are ensuring better affordability for buyers and a revival of the market,” explained Dr. Klein board member Michael Neumann.
“Signals for turnaround on real estate market”
ImmoScout24 also spoke of signals for a turnaround in the real estate market. The real estate platform announced yesterday that interest in purchasing real estate has increased again at the level that building interest rates have reached, which are currently at 3.5 to 4.0 percent. The excess supply on the market is reducing, says managing director Gesa Crockford. “We therefore assume that purchase prices will increase in the future.”
In the first quarter, the asking prices for existing apartments rose by an average of 0.6 percent compared to the previous quarter, according to ImmoScout24. In four out of eight metropolises, the asking prices are already above the previous year’s level.
Repayment share continues to fall
As loan amounts increase, there is a trend towards lower monthly repayments. The initial repayment with which borrowers repay their real estate loan fell again in March, said Dr. Klein board member Neumann. At 1.78 percent, it is below the 1.8 percent mark for the first time since October 2023.
On the one hand, borrowers would reduce their monthly costs, but would also accept that the overall term of the loan would be extended. But that also means a higher interest burden.
As far as fixed interest rates are concerned, Dr. Small hardly noticed any changes. The average fixed interest rate has hardly moved at all for five months and is around eleven years and two months. “Basically, borrowers in Germany opt for planning security and rather long fixed interest rates when financing their home,” explained Neumann.
Podcast “Gold & Ash: House Purchase Project”
In the first season of “Gold & Asche” the ARD financial editorial team The most important things when buying a house are examined step by step in seven episodes – with background information and expert knowledge. You can hear it in the ARD audio library and wherever podcasts are available. The individual episodes You will find here.
Episode 1: Is it worth buying a house? (21st of February)
Episode 2: The Right Time to Buy a Home (February 21)
Episode 3: How much house can I afford? (February 28)
Episode 4: What do I have to pay attention to when getting a loan? (6th March)
Episode 5: How the state provides financial support for buying a house (March 13)
Episode 6: Everything about energy renovation (March 20)
Episode 7: Was everything better before? (27th of March)