Hypoport
Hypoport in Berlin
Hypoport's third-quarter figures offer the clearest signal yet that Germany's residential mortgage market is normalising after two years of contraction. The company's Europace platform, which handles over 10% of all German mortgages, processed €57.13 billion in loan volume during the first nine months of 2025, up 18% year on year. These are completed transactions, not advertised rates or sentiment surveys, making them a reliable proxy for genuine market activity.
In Q3 alone, Europace processed €18.78 billion, a 10% increase over the same quarter in 2024. The figures confirm that pent-up demand from the 2023-2024 interest rate shock is converting into completed deals as borrowers accept the new pricing reality and banks regain underwriting confidence.
Within the Europace ecosystem, market share is shifting in revealing ways. The cooperative banking platform Genopace recorded the strongest growth at 25% year on year to €14.7 billion. The savings bank platform Finmas grew 19% to €8.7 billion, whilst Hypoport's Dr. Klein franchise system expanded 19% to €5.92 billion. Private banks showed measurably lower growth.
The divergence suggests borrowers are gravitating toward relationship banking during economic uncertainty rather than purely transactional lending. Cooperatives and savings banks have historically provided more stable lending through cycles, and their strengthening position indicates the mortgage market is prioritising reliability over aggressive pricing. For investors, this matters because it shows how mortgage capacity gets allocated and which property types and borrower segments gain access to finance.
Average fixed-rate periods have shortened from 11.4 years to 10.8 years. Borrowers are betting on interest rates declining over the medium term and accepting earlier refinancing risk rather than locking in current rates for longer periods. This represents a material shift in borrower psychology.
The composition of lending reveals where activity is occurring. Purchases of existing properties drive the bulk of growth. The secondary market is functioning again after largely freezing during the rate shock. New construction financing is growing but remains subdued, reflecting cost inflation, labour shortages and planning delays. Refinancing of expiring fixed-rate loans from 2015-2020 is increasing from a low base but volumes remain modest. Energy-efficient refurbishment financing continues to play a minor role despite substantial policy support.
Housing sector recovering from crisis lows
The housing industry segment shows what recovery looks like from extreme weakness. Dr. Klein Wowi Finanz, which arranges financing for residential developers, placed €970 million in loans during the first nine months, up 21% year on year. That represents recovery from 2024's collapse in social housing construction. Q3 alone saw 32% growth to €380 million, suggesting momentum is building but from a severely depressed baseline.
Dr. Klein Wowi Digital, the residential property management platform, grew managed units by 63% to 612,000 apartments. This reflects consolidation in Germany's fragmented property management sector and accelerating digitalisation as institutional landlords seek efficiency gains.
REM Capital, which arranges corporate financing, increased business volume by 62% to €1.77 billion. However, Hypoport explicitly noted this growth came with weaker margins, indicating intense competition for corporate real estate lending. Banks are deploying capital at compressed spreads, likely reflecting limited alternative opportunities and pressure to maintain market share. For borrowers this means favourable conditions. For lenders and intermediaries it signals margin pressure that could persist.
The instalment loan segment provides useful counterpoint. Volume remained flat at €5.43 billion despite Europace maintaining market share in a shrinking overall market. Banks continue acting restrictively in consumer lending even as mortgage lending normalises. This confirms the residential mortgage recovery is driven by collateral confidence and housing market stabilisation rather than generalised credit expansion.
Market implications
Hypoport's 18% growth provides hard evidence that Germany's residential mortgage market is functioning at meaningful scale. Transaction volumes now support normal market operations with enough liquidity for price discovery, adequate lending capacity for genuine buyer choice, and sufficient activity to sustain the professional infrastructure of brokers, valuers and advisors.
However, this is recovery from crisis lows rather than expansion from normal conditions. The residential transaction market contracted sharply in 2023-2024, so current growth represents healing. New construction financing remains weak. Energy efficiency lending has failed to gain traction. Consumer credit stays tight. And margin pressure in corporate financing suggests competitive intensity that limits profitability even as volumes recover.
REFIRE: For institutional investors, Hypoport's figures confirm Germany's residential mortgage market has moved past crisis into normalisation. Transaction volumes support renewed acquisition activity, though competition for assets remains intense given limited supply. The strength of cooperative and savings bank platforms signals preference for relationship lending over price-driven decisions, relevant for understanding how mortgage capacity flows to different property types and borrower segments.
Shortening fixed-rate periods indicate borrowers expect declining rates, which could accelerate transactions if correct. But weakness in new construction and energy retrofit financing shows capital flowing to existing asset transactions rather than new supply creation. That imbalance will perpetuate supply constraints even as the mortgage market normalises. The recovery is real and measurable. It does little, however, to address Germany's structural housing shortage.