property
Almost 40 percent more bank loans for condominiums
Building interest rates have fallen noticeably in recent months. Regardless of whether it’s a house or an apartment, consumers are once again turning to real estate financing. There is only a minus in one area.
Consumer demand for real estate loans is gaining momentum: from January to September, banks granted new loans for residential properties worth 56.7 billion euros – 16 percent more than in the same period last year, reports the Association of German Pfandbrief Banks (VDP). When it comes to financing for condominiums, new business from member banks even grew by a good 39 percent to 12.8 billion euros.
The association represents around 50 real estate financiers, including Deutsche Bank, Commerzbank, large savings banks, state banks and specialist financiers. Managing Director Jens Tolckmitt spoke of “another clear sign of a stabilization of the residential real estate market.”
Consumers and investors also made greater use of loans for one- and two-family homes in view of the fall in interest rates: here, the banks in the VDP granted loans worth a good 28 billion euros, an increase of a good fifth (22.5 percent). Only in the case of loans for the construction and purchase of multi-family homes, where companies are usually active, were there noticeable declines in the first nine months compared to the same period last year.
Recovery after a deep crisis
However, the overall high growth comes from a low level: Last year, the real estate market collapsed due to a sharp rise in interest rates – loans became rapidly more expensive. Many consumers could no longer afford property and sought fewer real estate loans, and purchase prices fell sharply.
The real estate market recently recovered as loans became cheaper again as key interest rates from the European Central Bank (ECB) fell. According to the Frankfurt-based FMH financial consultancy, the interest rates for ten-year building loans were recently around 3.3 percent, compared to an average of four percent a year ago.
Overall, the banks in the VDP granted loans totaling 89.6 billion euros in the first nine months – 6.9 percent more than in the same period last year. There were further declines in financing for office properties, which alone account for around half of loans for commercial properties. Since many offices are empty as a result of the home office trend, a crisis has arisen around office real estate, which is also affecting the financing banks.
dpa
Source: Stern
