You can save again on your real estate loan
Property loans have risen rapidly in price in recent months, but are currently 0.3 percentage points cheaper. This may not sound earth-shattering, but in absolute figures it can mean a reduction of around 20,000 euros for a ten-year fixed interest rate.
Building interest rates have more than quadrupled since the start of 2022. According to FMH, the average interest rate for a ten-year loan is currently 4.02 percent. Depending on the provider, this fluctuates between 3.65 and 4.93 percent per year. With a slight downward trend.
The comparison portal Check24 also comes to the conclusion that building interest rates have fallen slightly since the annual peak at the end of October. The best possible interest rates are currently around 0.3 percentage points lower than in October, even for ten-year mortgage loans at 3.60 percent effective p.a.
Building loan interest rates in comparison
With a construction loan of 400,000 euros and the current best offer of 3.60 percent p.a., this would result in interest costs of 128,162 euros until the end of the ten-year fixed borrowing rate. In this case, the monthly installment for house or apartment buyers would be 1867 euros. Compared to the average interest rate of 4.20 percent used by the comparison portal, this means a saving of 20,973 euros in interest costs and a monthly installment that is 200 euros lower.
Choose a short or long term?
The most important indicator for the development of building interest rates are ten-year federal bonds. This is because they largely determine the yields on mortgage bonds, which in turn are used by banks to refinance real estate loans. The latest inflation data from the USA has now caused the ten-year German government bond to fall further. On average across all interest rates, this means home loans are 30 basis points cheaper. At the same time, purchase prices are continuing to fall. Supply on the market is greater than demand. As a result, Check24 sees good opportunities for potential buyers again.
Anyone who is about to decide on a longer or shorter fixed interest rate should consider how interest rates are expected to develop. If you assume that interest rates will be significantly lower in five years' time than they are today, a short term is recommended. If, on the other hand, you assume that interest rates will tend to move upwards, a long-term hedge of 20 years would make sense. Security costs money, but creates long-term certainty about your own burden.
- Consulting with a financial advisor could help you make an informed decision about choosing between short-term and long-term real estate loans, considering the current trend of interest rates and real estate prices.
- The construction industry has been affected by the increase in real estate loan interest rates, making it more challenging for landlords to secure condominium financing at competitive rates.
- Despite the recent decrease in real estate loan interest rates, inflation is still a concern for tenants and landlords, as it can erode the purchasing power of their income.
- Some real estate experts suggest that investors should consider diversifying their portfolio by purchasing real estate loans or investing in real estate-focused mutual funds to hedge against inflation and interest rate risks.
- As the real estate market continues to evolve, it's essential for real estate agents and investors to stay informed about the latest trends in real estate prices, interest rates, and inflation, and how they impact the construction industry and potential investment opportunities.
Source: www.ntv.de
