Anyone planning to finance a property today is faced with higher hurdles and borrowing costs. At the same time, it can be said that interest rates have stabilized. Nevertheless, people interested in real estate in particular are wondering whether they should take out a loan now or whether it is worth waiting for more favorable conditions.
Development of interest rates
Just a few years ago, construction interest rates were around 1% – a historic low. But this era of cheap money is over. In 2022, the European Central Bank tightened the interest rate screw to curb inflation and mortgage rates rose. At the end of 2023, ten-year building loans climbed to around 4% – the highest they have been in ten years. However, the good news is that interest rates have stabilized again.
Currently, interest rates for real estate financing in Germany are typically between 3.5% and 4.5% APR for loans with a fixed interest rate of 10 years. However, compared to the 2010s, the level remains high.
Between inflation and the economy: how are interest rates behaving?
The future course of lending rates depends above all on inflation. If inflation remains high, the ECB has little leeway to cut interest rates. If it falls, cautious cuts could follow. The economy also plays a role: if the economy weakens, capital market interest rates usually fall – which can make loans cheaper. However, a significant fall in interest rates is not expected in 2025. A sideways movement is more likely. A relapse to previous record lows is considered rather unlikely.
Home ownership despite expensive loans?
Whether a property purchase is worthwhile despite high interest rates depends heavily on your personal situation. Those who are not under pressure can hope for better conditions – but risk rising prices as soon as interest rates fall and demand increases. Conversely, financing is also possible now, for example with more equity or reduced requirements in terms of location and size. The question also arises with inherited properties: sell or pay off co-heirs? High interest rates often influence the decision here – especially if a later debt restructuring is conceivable.
Wait and see or strike – expert advice provides clarity
This balancing act is often easier to manage with expert support. Independent financing experts can analyze the financial situation and run through various scenarios – for example, which interest rate is manageable and how different interest rate trends would affect the financing over the next few years. This provides a sound basis for decision-making and more certainty for further planning.
Unsure whether now is the right time for your real estate financing? On request, we can put you in touch with independent financing partners who can objectively assess your personal situation. At the same time, we check which real estate offers match your options. This creates a sound basis – for decisions that will stand you in good stead even in an uncertain interest rate environment.
Notes:
The generic masculine is used in this text to improve readability. Female and other gender identities are explicitly included where this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.
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