Real estate loans: Save interest on the loan interest through sustainability in construction

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Building a house near Rostock:

Banks reward sustainable building

Photo: Bernd Wüstneck/ dpa

Building or buying a house is no longer as much fun as it was half a year ago.

The average mortgage interest rate for a ten-year term has risen from less than 1 percent to well over 3 percent.

This is an increase that is clearly noticeable as a burden for many – in addition to the tightened general price level.

"For borrowers, the rise in interest rates means an increase in monthly installments in the range of several hundred euros," says

, CEO of the construction loan broker Interhyp.

"Often there are additional charges of more than 500 euros per month compared to the beginning of the year."

The main reason for the development is the increased interest level on the financial markets, which in turn is related to the high inflation and the Ukraine war.

Banks usually refinance their real estate loans through Pfandbriefe.

Their interest is based on the bond market, for example on the interest on federal bonds, and this has also increased in recent months.

The interest rate policy of the European Central Bank also plays a role.

"We expect interest rates on 10-year loans to be between 3.5 percent and about 4 percent by the end of the year."

Interhyp boss

"On the other hand, concerns about the economy are limiting the rise in long-term interest rates," says Interhyp board member Utecht.

"Therefore, there have also been setbacks in the increase, which is still possible."

The future development of building interest rates also depends primarily on the financial market and thus on the global crisis and the trust that Germany enjoys among investors.

Most experts assume that interest rates for real estate loans will continue to rise.

, for example

head of the FMH financial comparison platform, believes that the average interest rate will soon rise to over 4 percent.

Many experts even higher interest rates

"We expect interest rates for ten-year loans of 3.5 to around 4 percent by the end of the year," says Interhyp board member Utecht.

"The planned increase in the ECB key interest rate in July has already been largely priced in by the banks. The majority of the interest rate experts we surveyed monthly from ten German credit institutions also expect interest rates to continue to rise over the course of the year."

This is not a pleasant prospect for real estate buyers and builders.

It can be an advantage if the planned property meets certain sustainability requirements.

Because banks sometimes grant more favorable conditions for such buildings - an offer that, according to information from market participants, is in great demand.

And it's not just about the promotional loans from the state-owned KfW Bank, which are also in high demand.

"For customers who want to build energy-efficiently, there are various funding options from KfW," says Interhyp boss Utecht.

"In addition, we are currently seeing individual banks offering better interest rates for very energy-efficient properties."

The background is at least theoretically obvious: the loan interest reflects the risk that a bank takes on by granting the loan.

According to bank representatives, climate and sustainability risks also play a role.

Those who design their properties to be particularly sustainable and energy-efficient also reduce the credit risk and can get a lower interest rate in return.

There are also plenty of reasons for sustainable building: Real estate is one of the major stressors when it comes to climate change.

The real estate association ZIA, for example, writes in a brochure on climate protection that buildings in Germany cause around 30 percent of CO2 emissions.

This applies to commercial real estate as well as residential buildings.

The ZIA counts 19.2 million residential buildings in Germany.

With a heated net floor area of ​​3.8 billion square meters, they account for 22 percent of local energy consumption, according to the association.

Many private individuals want to reduce this energy consumption in their properties.

And banks sometimes offer special financing for this.

Commerzbank, for example, or the Munich mortgage bank are among the institutes that offer "green construction financing".

The environmental bank in Nuremberg, which explicitly positions itself as a sustainable bank, also makes such offers.

The environmental bank has been financing sustainable real estate projects for 25 years, a spokesman said on request.

The spectrum ranges from your own home and building communities to cooperative shares and commercial buildings.

According to the bank, it examines every building project not only in terms of its economic viability, but also according to ecological and social criteria.

The result flows into the in-house "environmental rating", with which the ecological credit rating of each requested project is determined.

research helps

"Reaching one of three credit rating classes is a prerequisite for a financing commitment," said the spokesman for the environmental bank's approach.

"On the basis of these creditworthiness classes, we determine the individual credit conditions for the respective construction project."

In principle, the following applies: the more sustainable the construction project, the more favorable the conditions.

At the GLS Bank in Bochum, which also pays attention to sustainability, the demand for financing was recently so great that the company did not accept any new inquiries for two weeks in June.

Up until a month ago, the institute also had better conditions for sustainable building, a spokeswoman said.

At the moment, however, this is not the case due to a change process.

The background, according to the spokeswoman, is the current interest rate uncertainty and interest rate fluctuations.

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"We want to combine ecological and social sustainability in construction":

Headquarters of the GLS Bank in Bochum:

Photo: Julian Stratenschulte/ dpa

But that should change soon.

"By the end of the year we want to combine ecological and social sustainability in construction even more closely," said the spokeswoman for the GLS Bank.

"To this end, we have developed our own sustainability rating for private residential real estate, which will enter the test phase in August."

This will probably further increase the options for borrowers in the future.

But interested parties should be careful, there are also reasons for skepticism.

In any case, it does not seem certain that construction interest will continue to rise in the future.

, for example, head of Neuwirth Finance in Starnberg and a proven interest rate expert, doesn't believe in it.

Neuwirth considers inflation, the ultimate driving force behind building interest rates in recent months, to be a temporary phenomenon.

Inflation will soon end in recession, he says.

Neuwirth is therefore convinced that building interest rates will be below 2 percent again at the beginning of 2023.

In addition, the providers of green construction financing may advertise their offers as attractive.

But interest expert Max Herbst points out that if you do thorough research, you will find credit providers who are cheaper – regardless of the sustainability of the real estate project.