New trend: Falling building interest rates offer the best opportunities on the real estate market

New trend: Falling building interest rates offer the best opportunities on the real estate market

The real estate market has experienced strong growth in recent years, with house and condo prices rising an impressive 94 percent between 2010 and 2022. This trend was encouraged by low building interest rates and a tight supply, which led to persistently high demand. Rebecca Scheidler, Managing Director of Engel & Völkers Finance Germany, confirmed at the female empowerment event “Les Ateliers Lillet” that up to 40 applicants per property used to be not uncommon.

However, the European Central Bank's interest rate turnaround since July 2022 has triggered a change in the real estate market and noticeably increased the costs of construction loans. In November 2023, interest rates on real estate loans reached a ten-year high of over 4.2 percent. But a new trend has emerged since the beginning of the year: with building interest rates falling to around 3.5 percent in January 2024, property buyers with excellent credit ratings can even secure interest rates below three percent. This development could continue and push interest rates towards the coveted three percent mark, making building money more affordable than it has been for a long time.

Scheidler emphasizes that it is currently an optimal time to purchase a property. The combination of declining building interest rates and comparatively low property prices opens up attractive opportunities for potential buyers. Falling interest rates can lead to reduced demand and ultimately make the real estate market more affordable. Real estate financing expert Scheidler therefore recommends taking advantage of current interest rates to realize your long-held dream of owning your own home.