The ECB Governing Council has once again decided to cut the three key interest rates by 25 basis points each. The decision reflects the assessment of the inflation outlook. This seventh interest rate cut in a row is also an encouraging signal for property buyers.
Inflation has continued to develop in line with experts' expectations. In March, both overall inflation and core inflation fell. The rise in prices for services has also weakened significantly in recent months. Most indicators suggest that inflation will settle sustainably close to the medium-term target of two percent. Wage growth is slowing and the eurozone economy has developed a certain resilience to global shocks.
The President of the ifo Institute, Clemens Fuest, supports the ECB's interest rate cut. "US President Donald Trump's unpredictable tariff policy has recently increased the risk of an economic downturn," says Fuest. Prof. Lena Dräger, monetary policy expert at the Kiel Institute for the World Economy, sees the measure as a further step towards monetary easing, but argues for a strong signal in view of the economic risks for the real economy and the financial markets. The Inflation Monitor of the Institute for Macroeconomics and Business Cycle Research (IMK) at the Hans Böckler Foundation shows hardly any differences in the inflation rates of different household types.
Interest rates have been lowered - and one would actually expect that building loans would then also become cheaper. Unfortunately, this has not yet been the case. The reason for this is thought to be the billions in debt taken on by the new German government. The analysis firm Barkow Consulting reports that interest rates for construction loans with a ten-year term have risen to their highest level in seven months.
Conclusion: Looking back over the last three years, the conditions for financing real estate properties remain stable and offer prospective buyers good opportunities for purchasing real estate due to the still favorable real estate prices.
Photo: © Moritz320, Pixabay
