This means that you will still pay the same real estate lending rates at maturity, even if interest rates have changed. Currently, the interest rates for real estate financing are very low and so many people can fulfill the dream of home ownership. Refurbishment A refurbishment loan is granted specifically for the renovation, remodeling, extension or refurbishment of an interior or exterior property.
Interest on real estate loans at historical lows
According to Lite lender, in the context of the DLB’s low interest rate policy, interest rates on 10-year real estate loans have fallen in series to around 1.3 percentage points. According to the market leader for private housing loans, the conditions are at the historically low low of the spring of 2015: “The economic power of Germany, combined with the moderate economic outlook in the rest of Europe and the fear of ribcage among many investors, ensures negative yields on German government bonds and thus for favorable refinancing conditions for banks.
In addition, the interest rate environment set by the central banks ensures low conditions. Irrespective of the low level of interest rates, real estate buyers continue to be cautious in taking out loans, Lite lender says. “Most real estate buyers are taking advantage of the favorable conditions to maximize repayments and drive debt reduction,” says Goris.
Still favorable interest rate climate for the purchase of real estate
The interest rates on real estate loans have been steadily rising since the middle of the year since mid-April 2008 following the sharp fluctuations in the general conditions in the spring. The best conditions for 10-year loans stood at nearly 1.3 percentage points at the beginning of July, according to an analysis of more than 400 banks and insurance companies by Lite lender. The bulk of buyers of real estate can currently co-finance at a rate of 1.5 percentage points.
“Despite the increased interest rates on long-term bonds, the best conditions for 20-year real estate loans are still below 2 percent,” explains Jörg Utecht, CEO of Germany’s largest private mortgage lender, the Lite lender Group. According to Lite lender, the best interest rates for five-year loans were 0.8 percentage points, slightly below the 1-percent mark on average.
Currently, the best terms for 15-year bonds are around 1.6 percentage points, and the best rates for 20-year bonds are around 1.9 percentage points. “Despite the inflation targeting approach, central bankers are currently open to further monetary policy action,” he said, but Lite lender assumes that interest rates will rise slightly in the long run.