Analysts have postponed hopes for an economic recovery in Germany until 2026. However, the outlook for the real estate sector is not so bad. With stable interest rates and property prices, many interested parties now want to take action.
"Expectations for an economic recovery are now focused on the new year," said Heiner Herkenhoff, chief executive of the banking association, towards the end of 2025. The current gloomy economic situation is also reflected in lending conditions. However, the conditions for private property purchases are relatively good: the European Central Bank (ECB) has lowered its key interest rate four times, mortgage interest rates are stable and property prices rose only slightly last year.
What will next year bring? What mortgage rates and property prices can financiers expect? What external factors influence interest rate developments?
In 2025, the top interest rates for ten-year construction financing ranged between three and just under 3.5 per cent. There were fluctuations, particularly in the first quarter, while only minimal fluctuations were recorded in the following months. In the fourth quarter, interest rates remained virtually unchanged at around 3.3 per cent. According to interest rate experts, potential buyers consider this year's mortgage interest rate trends to be the new normal. People have accepted that it is not worth waiting for interest rates to fall. They have also recognised that the current interest rate level is still attractive from a historical perspective.
Looking ahead to 2026, it can be assumed that the sideways movement of recent months will continue, albeit with a slight upward trend between 3.1 and 3.7 per cent. This forecast is based on fairly stable fundamental economic data. The market does not expect any major surprises, but rather anticipates a slight economic upturn in the eurozone and Germany. Inflation could fall slightly in 2026. Based on current indicators, there is currently no immediate reason for the European Central Bank to change key interest rates.
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