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Housing construction in Berlin: Rising interest rates could burden home builders in the future
Photo: Jörg Carstensen / dpa
Interest rates for financing property purchases threaten to rise in 2022.
Because with the rise in inflation, the building interest is likely to become a little more expensive.
Experts therefore advise real estate buyers to secure favorable conditions for a long time.
"I expect the interest rates for mortgage lending to rise by 0.25 to 0.5 percentage points in the coming year," says Max Herbst, founder of the Frankfurter FMH-Finanzberatung.
But even with an increase in building interest in this area, the conditions are "fantastic".
Fall does not see interest rates of more than three percent in the long run.
Hardly anyone believes that interest rates will rise sharply on the capital markets, but with high inflation central banks are under pressure to at least tighten their monetary policy, says Herbst.
This should also increase the general interest rate level.
The US Federal Reserve recently signaled several rate hikes for 2022.
And the ECB wants to let its Corona emergency purchase program for bonds expire at the end of March.
She expects inflation to be significantly higher in the new year.
Banks' new business continues to pick up
According to information from FMH, the interest for ten-year mortgage lending currently averages just under one percent per year. Herbst recommends long-term financing with a term of 15 to 20 years for house builders. "Why take the risk and not take the interest rates, which are still very good today, with you for long-term fixed interest rates?" He says. On the other hand, those who buy real estate not for personal use but for capital investment can also choose ten-year fixed interest rates and thus remain more flexible. "The building interest will probably fluctuate slightly in the foreseeable future."
Interhyp also expects interest rates to rise.
In its trend barometer, for which the Munich-based real estate financier surveys ten German banks every month, the vast majority of experts expect higher interest rates in the course of the new year.
Board member Mirjam Mohr expects a slight rise in building interest rates "in the range of several tenths of a percentage point" in the medium term, also because of the monetary policy steps taken by the ECB.
Interested parties with a specific property in mind should not be unsettled by fluctuating credit conditions, advises Mohr.
A solid property with robust financing is more important.
"Equity and the amount of the repayment should be chosen so that when the fixed interest rate expires, so much has already been paid off that the financing remains affordable even if interest rates rise."
Meanwhile, the boom in construction financing in Germany has continued, as a study published on Monday by the consulting firm PwC shows.
Another record year is ahead for real estate loans, it says.
Accordingly, the new business of banks and savings banks with mortgage lending increased from January to October to 235 billion euros.
In the same period last year it was 228 billion euros.
The building finance portfolio increased to 1.47 trillion euros in the first ten months and, according to information, has already exceeded the volume in 2020 as a whole (1.39 trillion).
"Low interest rates, a high savings rate and rising inflation rates should continue to have a positive effect on the growth trend in home finance," says Tomas Rederer, partner at PwC Germany.
Rising interest rates hit buyers when their financing runs out but the property has not yet been paid off.
Then the interest on the remaining debt can climb.
This can be dangerous if interest rates rise rapidly or if financing is on the edge.
With an increase in building interest by 0.2 percentage points, the monthly rate would increase by 67 euros per month with a financing of more than 400,000 euros, calculates Herbst from FMH.
"If the funding fails because of this, you'd better let it stay the same."
apr / dpa
