After a slight upward trend in the summer, construction interest rates remained stable in the fall at around 3.6 percent for ten-year loans. Using more equity capital enables better interest rates and conditions for construction financing.
Around 83 percent of financing experts expect construction interest rates to remain stable in the short term. Only just under 17 percent believe that construction interest rates could rise. The forecast for the next six to twelve months is as follows: around 67 percent of those surveyed believe that construction interest rates could rise, while around 33 percent predict that they will remain stable.
The phase of key interest rate cuts appears to be over. Upward economic and inflation expectations for next year tend to argue against further monetary easing. Construction interest rates have been moving sideways since the beginning of September. This is good news for prospective buyers, as stability makes the market more predictable.
Financing experts advise customers to contribute as much equity as possible. The more equity you contribute, the lower the loan-to-value ratio—and the lower the interest rate and monthly payments will generally be.
The loan-to-value ratio provides information about the ratio of equity to borrowed capital. It currently averages 80 percent, which means that people contribute about 20 percent equity to the financing. The average loan amount is around €340,000. It may be worth considering gifts or interest-free loans from parents or grandparents to increase your equity.
The real estate market also remains stable in most regions of Germany. There is little movement in the major cities in fall 2024. However, price increases are emerging in the annual review. It would be the wrong strategy to sit back and wait to buy real estate now. The current stable phase is an excellent time to look for the right property.
Photo: © Alexander Stein, Pixabay
