Real estate loans: interest rates at their highest level since 2009

New construction in Siegerland: »The interest rate development affects housing construction in particular«

Bad news for everyone who dreams of their own four walls: real estate loans in Germany are currently as expensive as they have not been since 2009. The average interest rate of ten-year loans has reached a value of just under 4.5 percent, according to data from the financing intermediary Interhyp. That said Interhyp CEO Jörg Utecht. Thus, the inflation and interest rate surge triggered by the Iran war affects homeowners and the construction industry in Germany equally.

In May, the average interest rate was 3.9 percent. Now, according to Interhyp, the previous interest rate high of the end of 2023 has been exceeded. Similarly high interest rates last occurred during the financial crisis in 2009, as can be seen not only from the Interhyp figures, but also data from the Bundesbank on housing loans to private households.

Reasons for the recent rise are in particular the resurgence of the Iran conflict and the resulting inflation concerns, as Utecht says. As a result, the European Central Bank increased key interest rates in order to dampen inflation. This strikes through in the usual chain reaction to the construction interest rates. Only if there is a sustainable solution in the Iran conflict, the inflation pressure is likely to ease and the construction interest rate will fall again noticeably, Utecht says. “However, there is little evidence of this at the moment.”

Real estate prices have not yet reached the highs of the years before the end of the zero interest rate phase in 2022. But higher interest rates quickly eat up a slightly lower price. With an average financing, the recent increase in interest rates means almost 200 euros more in monthly installment, says Utecht. »This leads to increased restraint among some customers.« Nevertheless, buyers would have some leverage in their hands even in the current market phase.

Probably the most important lever is negotiations with the owner. “Many sellers still have the maximum prices from the years 2021/2022 in mind,” says Dirk Wohltorf, President of the Real Estate Association Germany (IVD), the umbrella organization of the German brokers. The offer prices on the Internet are often still the desired prices of the sellers, but are often no longer certified in the amount. “If interest rates go up significantly, prices have to go down,” says Wohltorf.

Sufferers are not only homeowners. “The interest rate development is particularly affecting housing construction – with serious consequences,” says a spokeswoman for the Bavarian Building Association. Many construction companies in the region would hardly have any housing contracts.