The current interest rate trend and what it means for property buyers

The current interest rate trend plays a decisive role for property buyers. In this blog post, we want to take a look at the current developments on the interest rate market and analyse what impact they could have on potential property buyers. From rising interest rates to possible loan reductions – we will shed light on all the important aspects that you should keep an eye on as a prospective property owner.

The development of the key interest rate

In recent months, the ECB has influenced the financial market by adjusting the key interest rate. A key interest rate of 0% in 2016 meant that loans were cheaper than ever before. Since then, there have been regular increases, leading to a peak rate of 4.5 %. In June, the prime rate was cut again for the first time since September 2019 and currently stands at 3.75 %. Nevertheless, loans for property financing have become noticeably more expensive for many buyers in terms of overall costs. As the inflation rate has fallen, no further increases in the key interest rate are expected for the time being. A few days ago, the ECB announced a further interest rate cut of 0.25%, which will come into force in a few days’ time. This is basically a positive development for property buyers. However, at the moment, it is assumed that the interest rate market will stabilise rather than see further interest rate cuts.

Effects on building interest rates

While interest rates on bank deposits develop in a similar way to the prime rate, the development of building interest rates is somewhat different. Building loans have become more expensive since 2022 and have been in a range of around 3 to 4 % since then. In May, a slight increase in interest rates was recorded once again before there was also a minimal drop. As construction interest rates are generally fixed for a longer period, interest rate changes do not have an immediate impact on loans, which generally makes forecasting more difficult.

Action tips for property buyers

The fact that no major changes in construction interest rates are expected can be interpreted in different ways for property buyers. On the one hand, buyers who have found a property and have a suitable financing offer can sign the purchase contract with peace of mind – because there is no need to wait for significantly better conditions. However, for those who are currently unable to afford property financing, the expected sideways movement means that there are no certain prospects for more favourable loans for the time being. If you would like individual advice tailored to your personal financial situation, you will find an experienced expert in our financing partner. Together we will clarify how you can realise your property purchase in Berlin, Potsdam, Gatow, Kladow and Brandenburg.