▷ Trend reversal heralded in construction interest rates

20.01.2022 – 10:43

Interhyp AG

Munich (ots)

  • Positive yields on German government bonds for the first time since May 2019
  • Interhyp: Interest rates for real estate loans are becoming visibly more expensive
  • Further increase expected over the course of the year

Real estate loans have recently become visibly more expensive. Interest rates on ten-year loans rose from 1 percent to around 1.15 percent in January. Since September, the conditions have risen by a total of 0.3 percentage points. “Property buyers who need financing are feeling the effects of the central banks’ announcements that they will tighten monetary policy. After a significant rise in American government bonds, German government bonds have also returned to positive yields for the first time in a long time. Since government bonds are an important indicator for the building money, building interest is also going up,” says Mirjam Mohr, board member for private customer business at Interhyp, Germany’s largest broker for private building financing. Interhyp expects interest rates to rise further over the course of the year. “Due to the recent increase in interest rates combined with the prospect of further rising conditions, we see a trend reversal in building finance,” says Mirjam Mohr. “Nevertheless, we do not advise hasty financing: in historical comparison, interest rates remain low. Ten years ago, conditions of more than three percent were common.”

With a view to interest rate policy, inflation and economic development, Interhyp considers a further increase in interest rates of several tenths of a percentage point for real estate loans in the course of 2022 to be likely. The fact that this is also the opinion of many industry experts is evident from the company’s most recent monthly building rate trend barometer. All of the experts surveyed assume that interest rates will rise over the course of the year. In particular, high inflation and hopes of an end to the pandemic and further economic recovery have been changing the mood on the markets for several weeks. According to Interhyp, a further, certain increase in interest rates is possible in the long term as a result of the most recent announcement by the financial supervisory authority BaFin. From February 2023, she wants to encourage banks to better secure real estate loans with capital buffers due to the sharp rise in real estate prices. According to Interhyp, however, it is unclear to what extent interest rates will rise as a result. Banks and buyers are already concerned about security. Mirjam Mohr: “According to our experience and figures, buyers in Germany have always financed rather conservatively with long fixed interest rates, high repayments and rather a lot of equity.”

Interhyp has been observing for several months that customers are expecting rising interest rates, also due to the discussions about inflation. This can be seen, for example, in a higher proportion of so-called forward loans, which homeowners use to secure favorable interest rates for the future. In addition, buyers have recently secured themselves more often with longer fixed interest rates, according to Interhyp. In view of rising conditions, Interhyp advises property buyers who need financing to compare offers. Mirjam Mohr: “Banks price in market developments at different speeds. They pass on increases in conditions at different speeds,” says the expert. Buyers with specific properties or in the advanced financing process should rather accept existing offers than bet on falling interest rates in the short term. Forward loans and long fixed interest rates of more than 15 years are currently sensible options for securing favorable interest rates for the future.

About Interhyp

The Interhyp Group is one of the leading addresses for private mortgage lending in Germany. With the brands Interhyp, which is aimed directly at end customers, and Prohyp, which is aimed at individual brokers and institutional partners, the company successfully placed a financing volume of EUR 28.8 billion with its more than 500 financing partners in 2020. The Interhyp Group combines the performance of the self-developed mortgage lending platform eHyp with customer-oriented digital offers and the multiple award-winning competence of its financing specialists. The Interhyp Group employs around 1,600 people and is personally present for its customers and partners at over 100 locations.

Press contact:

Britta Barlage, senior company spokeswoman, Interhyp AG, Domagkstraße 34, 80807 Munich, phone: +49 (89) 20307 1325, email: [email protected], https://interhyp.de

Original content from: Interhyp AG, transmitted by news aktuell

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