study
New business with mortgage lending collapses again
New business with mortgage lending has been shrinking for months. photo
© Federico Gambarini/dpa
Higher interest rates, uncertainty on the real estate market and more critical banks: consumers continue to be very reluctant to take out construction loans. There doesn’t seem to be any improvement in sight for the new year either.
The demand for mortgage lending has collapsed again as interest rates have risen. The new business of German banks with real estate loans to private households and the self-employed fell by 43 percent in December compared to the same month last year, as new data from the consulting firm Barkow Consulting show. With a volume of 13.5 billion euros, new business is at its lowest level since June 2011, according to the analysis. The investigation, which is available to the German Press Agency, is based on figures from the European Central Bank and the Bundesbank.
The decline in December is the fourth negative record in a row, said consultant Peter Barkow. Measured against the record volume of 32.3 billion euros in March 2022, there is a minus of almost 60 percent. There is no relief in sight: Schufa data indicated a decline of 41 percent in January compared to the same month last year.
Financing intermediaries reported a lot of reluctance on the part of customers. “Interest in real estate investments has fallen among investors, and financial feasibility among owner-occupiers,” says Michael Neumann, head of Dr. Small. Overall, fewer people could currently afford a property because they cannot raise the recommended equity of 20 percent of the purchase price, observes Tomas Peeters, head of Baufi24. And Jörg Utecht, head of the Interhyp Group, says: “Investors in particular are currently holding back because buying real estate is no longer profitable for them in the current environment.”
New business with construction financing has been shrinking for months, also because lending rates have more than tripled within a year. Builders are also having trouble with the high construction costs, which is slowing down new construction. And there is uncertainty on the real estate market as to how far prices will fall after the long boom.