Interest rates on real estate loans remain at historical lows
Business News Interest rates on real estate loans are still at historic lows. According to the Association of German Credit Institutions in Berlin, the average interest rate for ten-year fixed-interest loans in 2017 was around 1.4 per cent. The average interest rate currently stands at 1.46 percentage points (as at 6 February).
To illustrate: In 2008, buyers still had to pay an average of 4.6 percentage points interest, in 2013 about 2.7 and more. In individual cases, however, interest rates can vary widely. Notes for borrowers: – Choose a term: Due to the low interest rate level, it is better to set a fixed interest period of at least ten years. If you want to plan particularly sustainable, you can also sign up for a fixed interest period of 15 or even 20 years.
- Selecting installment payments: A high repayment rate – eg 3 percentage points instead of the usual 1 percentage point repayment – will repay the loan more quickly. This saves considerable costs over the entire useful life. It needs to be tuned beyond that. – Exceptionally good termination right: Irrespective of the agreed duration, real estate loans can be terminated after ten years.
This can be used by borrowers to have a more favorable interest rate for the remainder of the deadline.
Rise in interest rates on real estate loans
Capital market interest rates rose sharply in the last few weeks of trading. In the eurozone, good economic data and somewhat higher inflation led to the expectation that the ECB could reverse the bond purchase program very soon. With fewer purchases from the central bank, the shortage on the bond market would be reduced, thus providing more return. If he implements his election program as planned, the inflation risk in the US will increase significantly.
As a result, the US Federal Reserve would have to raise interest rates more than previously thought. Experience shows that raising US interest rates will not have any impact on the euro area, so that interest rates in Germany should rise as well. For mortgage lending, too, the trend reversal on the bond markets should stimulate interest rates.
Building owners and property buyers should therefore not dwell too long on the still good conditions.