Financial expert explains: Building interest rates in Germany are again below 4 percent

Financial expert explains: Building interest rates in Germany are again below 4 percent

According to a report by www.faz.net, building interest rates in Germany for loans with a ten-year fixed interest rate have fallen well below the 4 percent mark. The interest rate for ten-year building loans is now on average 3.87 percent according to the consumer platform Biallo and 3.78 percent according to FMH Finanzberatung.

The change in interest rates had previously caused building interest rates to rise from less than one percent at the beginning of last year to 4.22 percent at times. This increase was largely influenced by factors such as the federal bond yield and competition between banks.

The yield on federal bonds briefly fell from more than 3 percent in October to around 2.2 percent. This reflects the European Central Bank's (ECB) reluctance to raise interest rates. The economic outlook, inflation expectations on the financial markets and interest rate developments in other currency areas also play a role in the development of interest rates.

The question that now arises is how the price development of real estate in Germany will change. According to Europace's house price index EPX, there was a slight increase in September, while the Association of German Pfandbrief Banks (VDP) index continued to decline in the third quarter.

Reiner Braun from the real estate institute Empirica notes that, purely mathematically, prices should rise when interest rates fall, but there are many imponderables in the real estate market and no one can predict exactly what will happen next. He emphasizes that the long-term development of prices will also depend on the economy and real income development.

Overall, it is to be expected that the lower building interest rates could have a positive impact on the real estate market if this development continues and the economy remains stable. This could lead to rising house prices and increased demand, especially if potential buyers want to take advantage of lower interest rates. This trend could also lead to more investment in the real estate market, which could have a positive impact on the industry overall.