The corona crisis means that property buyers can take out very favorable loans. Anyone who wants to buy a house or an apartment can secure terms close to record lows, observe loan brokers.
The outlook is also good. Even negative construction interest rates were allowed to move back into the focus, they believe. In this case, borrowers did not even have to repay a loan in full.
"The uncertainty caused by the coronavirus has led to an all-time low in construction interest rates," says mirjam mohr, head of retail banking at interhyp. According to the financing broker, the majority of borrowers can take out loans with a ten-year fixed interest rate for around 0.6 percent per year, and with a good credit rating, around 0.4 percent is possible.
Interhyp compares offers from over 400 banks. Compared with the previous month, conditions had recently improved by a further 0.1 percentage points. Even loans with a 15-year fixed interest rate, which consumers use to secure low interest rates for a long time, were offered at well below one percent.
The rough financial sales dr. Klein sees ten-year construction loans at some regional banks starting at 0.31 percent, the construction financing broker huttig& rompf a "realistic lower limit" of about 0.35 percent. With 15-year fixed interest rates, the conditions were at best around 0.5 percent. "For the time being, even with the best credit ratings, a positive interest rate will be the norm for real estate financing," says chief executive ditmar rompf.
As the stock market plummeted because of the corona crisis, many investors fled into government bonds. They are considered comparatively safe. Yields on ten-year federal bonds, which are the benchmark for construction interest rates, have therefore fallen to a record low of less than minus 0.80 percent. In addition, central banks such as the american fed have drastically reduced the prime rate, which is putting pressure on the overall level of interest rates on the capital markets.
The low interest rates for real estate loans are a relief for consumers who can hardly cope with the rapidly rising prices, especially in cities. With the real estate boom, the volume of construction financing in germany has swelled in 2019. New business grew to a high of 263 billion euros, recently analyzed by the consulting firm pwc. Many people invest their money in real estate, because otherwise there is hardly any interest on the savings.
Even if the yields on federal bonds have recently climbed again somewhat: the conditions for real estate loans were allowed to remain good for the time being. "We expect interest rates on real estate loans to remain low in the coming weeks and for the year as a whole," says interhyp’s mohr. At most, a slight increase is conceivable – for example, when demand for federal bonds is no longer as strong because the german government has to spend a lot of money on aid programs.
With the corona crisis, negative interest rates are now even being applied to real estate loans, as was already speculated in the fall? Apart from some demand loans, this is not yet an issue, says interhyp. Only some loans from the state-owned forderbank k have negative interest rates when redemption subsidies are factored in. "Many banks have set positive minimum interest rates," says mohr.
If real estate buyers take out construction loans with a minus interest rate, they get a discount from the bank: instead of 200.000, for example, they would only have to pay 199 euros.Repaying 000 euros.
Michael neumann, chief executive officer of dr. Small private customers, think negative interest rates unlikely, at least in the short term. "The impending economic downturn may lead to higher risk costs and higher construction financing terms on the part of banks." At present there is maximum uncertainty in the capital market, which could last for weeks. He continues to expect "extremely attractive interest rates" for builders, buyers and follow-up financing. "Given the current level of interest rates, i consider it inappropriate to speculate on even lower interest rates," he advises consumers.
Some people, however, are afraid of the financial risk of buying real estate in the face of the corona crisis. "For a few weeks now, we have seen a drop in customer inquiries," says rompf. This is due to the uncertainty surrounding the virus pandemic.
Stefan mitropoulos of landesbank helaba believes the hey phase in the real estate market could be over. All real estate cycles in germany have ended in recession in recent decades, says economist. Housing purchases depend on positive income expectations: "if you expect economically difficult times, you don’t go into debt with hundreds of thousands of euros."