Building interest rates are changing: what does this mean for my real estate purchase?

Have you noticed what’s happening on the interest rate market? Following the recent interest rate cuts by the European Central Bank (ECB), construction interest rates are now on the verge of a significant turnaround. Experts are predicting that interest rates will not fall any further in the near future. But what does this mean for you as a property owner thinking about selling?

Why do building interest rates change?

Building interest rates change due to various factors, which are primarily influenced by the monetary policy of central banks such as the European Central Bank (ECB). Changes in the ECB’s key interest rate have a direct impact on the cost of lending to banks, which then pass this on to private customers. Economic indicators such as inflation, the unemployment rate and general economic growth also play a role. Following interest rate cuts by the ECB, which were intended to help combat high inflation, experts are hardly expecting any further major cuts in key interest rates in the coming months; in fact, the opposite is the case. The conditions for building loans will adjust accordingly.

The latest developments in building interest rates

There has been a significant increase in building interest rates over the last 7 days. In particular, interest rates for 10-year fixed rates have risen by 0.33% to an average of 3.69%, the highest level in seven months and the sharpest weekly increase since the global financial crisis 18 years ago. This is due to the planned measures of the expected future German government, which intends to issue additional federal bonds, which will require higher interest rates and thus lead to rising building interest rates. These developments make it all the more important to compare different credit institutions in order to find the best financing offer. Together with our financier, we will help you to find the right financing offer, even in times of rising interest rates.

Influence of rising interest rates on real estate purchases

Rising construction interest rates have a direct impact on the financing options available to homebuyers, as they increase monthly loan installments and therefore make the total cost of a home loan more expensive. This can reduce the affordability of homes, especially for first-time buyers who are reliant on financing larger sums. At the same time, demand for property could fall as fewer people can afford to buy, potentially stabilizing or even lowering property prices. Such market conditions require well thought-out financing strategies and careful planning on the part of buyers.

What does this mean for property sellers?

For property sellers, rising construction interest rates mean that demand for properties may decrease as potential buyers have to shoulder higher financing costs. This can lead to longer selling times and possibly lower selling prices as fewer buyers are willing or able to pay the asking price. It can therefore be beneficial for sellers to start the sales process now, before interest rates rise further and the market potentially cools. A professional valuation and strategic advice can help determine the best time to sell and the best sales strategy.

Bream Immobilien advises you

If you are still hesitating whether now is the right time to sell your property in Berlin or Potsdam, we offer you a non-binding initial consultation. We will show you how you can take advantage of the current market conditions and complete the sale before the market turns negative for sellers.