Property financing stabilises

Mortgage interest rates are hardly moving at the moment. The economic and inflation data do not yet give the European Central Bank (ECB) any reason to cut interest rates. The market is slowly getting used to the changed situation through price adjustments. 

An important indicator for the development of mortgage interest rates is the ECB's key interest rate. The interest rate, which the central bankers set regularly, in turn depends heavily on the current inflation rate. This fell at the beginning of the year and, according to Eurostat, stood at 2.8 per cent in the eurozone in January. Although the inflation rate is well on its way to reaching the target of two per cent, the monetary authorities have kept interest rates constant since September 2023 after a series of increases and are relying on patience.

Financial experts assume that the first interest rate cut will not take place before the end of the second or beginning of the third quarter. Until the end of 2023, five to six small interest rate cuts were still expected in 2024. Market participants now expect only around three steps by the end of the year.

In the meantime, the first prospective property buyers have given up their reluctance to buy a property. The reason: the fall in property prices is making buying a property more attractive again. Sellers have become more willing to negotiate - buyers should take advantage of this.

The changed purchase conditions are an opportunity for prospective buyers. This is why Finanztest compared the offers of 81 banks: The differences are enormous. For the same loan, borrowers pay around 200 to 330 euros less per month with a favourable bank than with an expensive provider. At the end of the fixed interest period, this can make a difference of more than 83,000 euros.

How expensive a loan will be depends not only on whether the bank is favourable. It is just as important that the financing concept is right. This includes, for example, how much equity the borrower can contribute, how high the amortisation is and when the loan is to be repaid. Further information can be found at www.test.de/immobilienkredite.

(Photo: © Fabian Holtappels, Pixabay)