Private German housing loans at all-time cheapest level

Financial services provider Dr. Klein’s latest trend indicator shows how private building loans in Germany are expected to remain extremely cheap for the foreseeable future, with ten-year fixed interest rates for private financing only 0.4% at some banks. The low demand for forward loans highlights how expectations are that the situation is unlikely to change for quite a while.

The standard rate for a sample financing for €150,000 with a principal repayment of 2%, a loan-to-value ratio of 80% and a fixed interest rate of ten years fell to €379 in August. According to Dr. Klein, this is around 1% less than in the previous month and 4% or €15 less than a year ago. The average loan amount, on the other hand, rose from €230,000 in 2018 and €262,000 in 2019 to its current level of €290,000.

Only 5.5% of the loans are forward loans which, for a premium, lock in the current interest rate level for a later date. This indicates that most market participants do not expect a change in interest rates in the near future. About 82% of all financings are classic annuity loans