This is how the high financing interest rates affect

For many prospective real estate buyers, the past year felt crisis-driven. In the real estate and construction financing sector, rapidly rising construction interest rates caused a drastic upheaval. The turnaround in interest rates made itself felt insidiously through slightly falling real estate prices at the end of 2022 in some regions.

But despite the energy, inflation and climate dilemma, the desire to own one's own four walls remained unbroken in 2022. This is shown by a survey conducted by the credit broker Dr. Klein. However, those who realized their desire last year were not only confronted with high real estate prices. Due to enormous interest rate increases, construction financing had also become more expensive. Nationwide borrowers turn therefore noticeably at the sum, which they take up for their own home: Compared with the previous year, the average loan amount fell by five percent from EUR 388,220 to EUR 370,670.

In 2022, the most significant decline in the development of loan amounts was observed in Hamburg: minus eight percent compared to the previous year. Nevertheless, the highest loan amounts for property are still taken out here. By contrast, one German state recorded a significant increase in loan amounts compared with the rest of Germany: Thuringia. The financing volume there increased from 272,700 euros in 2021 to 284,420 euros in 2022.

According to Qualitypool GmbH, calm has returned for the time being following the latest interest rate decisions by the ECB and the Fed. The bond and interest rate markets have calmed down. The European Central Bank's latest decision was in line with expectations, with the key interest rate raised by 50 basis points to 3.0 percent at the beginning of February.

An interest rate pause could now follow, during which the European Central Bank analyzes the effect of its measures. But that would not necessarily be the case if there were no clear signs of a recovery in consumer prices. In January, inflation in Germany was higher than hoped for at 8.7 percent. This is a sign that the monetary policy measures are not yet having the desired effect. The targeted core inflation of 2.0 percent is still a long way off. Conclusion according to Qualitypool: Construction interest rates remain on a restrained sideways trend.

(Photo: © Steve Buissinne, Pixabay)