Real estate: New business with construction loans is growing by a quarter in 2024

Real estate: New business with construction loans is growing by a quarter in 2024

property
New business with construction loans is growing by a quarter in 2024






Consumers again use real estate financing much more frequently. Because sunken interest rates make loans cheaper. Whether the gratifying trend continues from a consumer perspective is uncertain.

Thanks to somewhat sunken building interest, the demand from consumers has risen sharply for construction finance. The new business of German banks with real estate loans to private households and self -employed grew to 198 billion euros in 2024, shows an evaluation of the analysis company Barkow Consulting, which is based on Bundesbank’s data. That is almost a quarter more (23 percent) than in the previous year.

In December alone, the new business of the evaluation was 17 billion euros – an increase of 40 percent of the previous year.

In the course of key interest rates of the European Central Bank (ECB), construction interest rates have given in somewhat in recent months. This makes real estate financing cheaper for consumers.

“The upswing is there, stabilizes and will probably continue,” wrote Managing Director Peter Barkow. However, an acceleration as in the third quarter can no longer be read from the data.

According to the Frankfurt FMH finance consultation, interest of around 3.5 percent was recently due for ten years of construction loans. That is less than six months ago (3.6 percent). According to the FMH, debtor, however, still got away with an interest of a good 3.3 percent.

It remains to be seen how increased interest rates have affected the building finance business since the beginning of the year, Barkow wrote. “Uncertainties imported from America in relation to interest and economic growth could also put a strain on recovery.” The capital markets also have uncertainty as to whether the central banks will reduce the key interest rates as much as the end of a few months ago.

Relaxation after deep slump

The new business with private construction financing had gone to the spring of 2022 thanks to low interest rates, then a strong interest increase ended the high. Since the construction costs also increased vigorously, many people gave up their plans for building or buying a property. In 2023, the new business of the banks with construction financing had collapsed to 161 billion euros according to Barkow Consulting data – 37 percent less than 2022.

dpa

Source: Stern

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