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Building interest at 3 percent: This is what real estate financing costs

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Building interest at 3 percent: This is what real estate financing costs

The building interest rate is currently around 3 percent. How does this affect property prices? picture alliance / SvenSimon | Frank Hoermann/SVEN SIMON

Real estate interest rates in Germany are stabilizing at around three percent, according to an analysis by Check 24. The best interest rates for ten-year building financing are currently 2.97 percent, while the average interest rate is 3.29 percent. Ingo Foitzik, Managing Director of Construction Financing at Check 24, expects increasing demand for properties to buy and slightly rising property prices.

At the beginning of the year, real estate interest rates fell to below three percent. A current evaluation by the comparison portal Check 24 shows that they have stabilized there. According to this, the best possible interest rates for ten-year building financing are currently 2.97 percent. At 3.29 percent, the current average interest rate is only 0.15 percentage points higher than at the beginning of January.

Real estate prices could rise slightly

“The interest rate level has stabilized after the sharp fall in interest rates from November to the beginning of January,” says Ingo Foitzik, Managing Director of Construction Financing at Check 24. “The best interest rates for construction financing with a fixed interest rate over ten years fluctuate between 2.9 and 3.3 percent. At the same time, we are seeing increasing demand for properties to purchase. We assume that real estate prices will increase slightly.”

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With a building financing of 400,000 euros and the current best interest rate of 2.97 percent, buyers will incur interest costs of 106,012 euros. The monthly rate in this case is 1,657 euros. For comparison: Compared to the interest rate at the beginning of December of 3.29 percent, house or apartment buyers save 11,267 euros in interest costs with a monthly rate that is 106 euros lower.

Example calculation for real estate financing

Example 1Example 2Loan amount400,000 euros400,000 eurosInterest rate pa2.97 percent3.29 percentMonthly rate 1,657 euros1,763 eurosInterest costs 106,012 euros117,279 eurosSource: Check 24, as of February 22, 2024

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The wait until the interest rate turnaround shouldn’t be too long

An analysis by Barkow Consultig also comes to the conclusion that the possible end of the interest rate turnaround could already have a positive impact on demand for real estate and construction financing. Background information: The next interest rate decision from the European Central Bank (ECB) is due on Thursday.

However, some market players are rather skeptical about the fall in the key interest rate: “The ECB meeting next Thursday promises excitement. Not because an interest rate cut could be decided. That is almost impossible,” says Tomas Peeters, Managing Director of Baufi24 Baufinanz GmbH. “Rather, the explosiveness of the meeting lies in what ECB boss Christine Lagarde has to say,” says Peeters. Nevertheless, the financial expert is convinced that the wait until interest rates turn around should not be too long.

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