Gli aumenti dei tassi di interesse persistono in un contesto di riduzione degli aggiustamenti dei tassi di interesse
The European Central Bank (ECB) has recently decreased its primary interest rates in the Eurozone by 0.25%, setting it at 4.25%. This is supposed to make credits cheaper. However, the narrative has changed in the real estate financing sector.
The European Central Bank's decision to adjust to the declining inflation rates in the Eurozone and lower the primary interest rate, which commercial banks borrow money from them at in the Eurozone, by 0.25% to 4.25%, should positively impact mortgage rates.
Nevertheless, mortgage rates have increased more than fourfold since the beginning of 2022. According to Check24, building loan interest rates have been climbing since the start of the year. In mid-January, the lowest rate for a ten-year fixed-rate mortgage was 2.93%, whereas the current rate stands at 3.11%.
The average fixed-rate interest rate currently is 3.51%, 0.37 percentage points higher than in January. For a building loan of €400,000 and an initial repayment rate of three percent, this amounts to €117,308 in interest costs after the end of a ten-year fixed-rate period. In January, the interest costs would have been €105,202 – €12,106 less.
"The ECB's interest rate reduction was already factored in by banks at the start of the year," says Ingo Foitzik, head of mortgage financing at Check24. "If two or three more interest rate cuts were anticipated in 2022 in January, banks now anticipate, due to persisting high inflation, only one or two further cuts for 2024. Consequently, mortgage rates have risen since the start of the year in total."
The ECB's decision impacts mortgage rates indirectly. The most crucial factor is the interest rates for ten-year German government bonds. They determine the yields for Pfandbriefe, which banks then use for the refinancing of real estate loans.
A closer look at the inflation rate
The FMH Financial Consulting had previously speculated before the interest rate cut that borrowers wouldn't pay less for their mortgage financing in the near future. Those who want to know how mortgage rates will progress should not consider the benchmark interest rate, but the inflation rate. It hasn't declined in the past month, and whether it will decline in June is also questionable. It is the ECB's duty to maintain a stable currency. If the benchmark interest rate is lowered while the inflation rate does not warrant this decision, investors state: German government bond, yes, but only at higher interest rates, if the ECB does not ensure a declining inflation. An interest rate reduction is not an effective tool for this. If the yield of the 10-year German government bond rises due to investors demanding higher interest rates, Pfandbrief yields also rise - and eventually, mortgage rates do as well.
Those who are considering a shorter or longer interest rate binding period should consider which interest rate development they anticipate. If one assumes that interest rates will be significantly lower in five years than they are today, a short term is recommended. If, however, one imagines that interest rates will rather go upwards, a long-term securitization of 20 years would be wise. Security comes at a cost, but offers long-term certainty about one's own burden.
