stuartmiles/Depositphotos.com
Many homeowners are facing higher refinancing cost as earlier fixed deals expire
Homeowners who borrowed during Germany’s era of ultra-cheap money are now reaching refinancing day — and discovering that refinancing in 2026 is not simply about paying a higher interest rate. It is about reconciling two very different financial realities: being substantially wealthier on paper while facing a much larger monthly mortgage bill.
Cast your mind back to 2016. Interest rates were at historic lows, property prices in most German cities were still within reach, and a generation of German homebuyers locked in ten-year fixed-rate mortgages at around 1.4%, confident they had secured financing that would comfortably see them through the next decade.
According to new analysis by ImmoScout24, a homeowner who borrowed €350,000 in 2016 at 1.4% and has been repaying at just 1% per year has been paying around €700 a month. A manageable monthly payment, the sort that fits comfortably into a household budget. After ten years, the remaining debt still stands at roughly €312,000. Refinancing that balance today at around 3.9%, while keeping the same repayment rate, pushes the monthly payment to approximately €1,276.
That is an increase of €576 every month — or 82%. For exactly the same house, with no additional borrowing, no renovation and no change in lifestyle.
Yet interest rates are only half the story.
The same decade that has made refinancing substantially more expensive has also made many homeowners considerably wealthier. ImmoScout24 estimates that residential property prices across Germany have risen by an average of around 71% since 2016. In some regions the increase has been even more dramatic, with prices in Oder-Spree more than doubling, while even mature markets such as Munich have still recorded gains of more than 40%.
This is the central paradox of refinancing in 2026: asset-rich, cashflow-squeezed.
The equity is real. So is the increase in monthly repayments. The difference is that the equity sits quietly in the walls of the house, while the higher mortgage instalment has to be paid from the household bank account every month.
The severity of that payment shock depends largely on decisions made a decade ago. Borrowers who chose higher repayment rates during the low-interest era are now in a much stronger position because they have reduced their outstanding debt more aggressively. On the same €350,000 mortgage, an initial repayment rate of 2% produces a refinancing payment around 36% higher than before. At a 3% repayment rate, the increase is only around 6%.
The lesson is an uncomfortable one. During the era of ultra-cheap money, the smallest repayment often appeared to be the most affordable choice. Ten years later, it has become the most expensive one.
The same arithmetic applies to larger mortgages. While the percentage increases remain broadly unchanged, homeowners who originally borrowed €550,000 or €750,000 now face monthly payment increases running into many hundreds of euros. In cities such as Berlin, Munich, Frankfurt and Hamburg, where larger mortgages were commonplace even in 2016, refinancing is becoming a much more significant household financial event.
There is, however, one practical lever available before refinancing takes place. ImmoScout24 managing director Dr Gesa Crockford argues that homeowners should consider having their property professionally revalued before approaching lenders. In most parts of Germany, today's market value is substantially higher than the original purchase price, improving the loan-to-value ratio and potentially allowing borrowers to negotiate more favourable refinancing terms. It does not eliminate the interest-rate shock, but it can soften its impact.
The 2016 generation of borrowers is therefore not without options. They are simply discovering what every interest-rate cycle eventually teaches: fixed-rate mortgages postpone market reality, but they do not abolish it. For ten years, a 1.4% mortgage insulated borrowers from rising financing costs. Once that protection expires, the mathematics become considerably less forgiving.
Commercial real estate has spent the past three years grappling with refinancing risk as loans agreed during the era of ultra-cheap money mature into a higher-rate environment. In 2026, many German homeowners are beginning to discover exactly the same arithmetic. The difference is that the refinancing wall arrives not as a billion-euro maturity schedule, but one mortgage — and one household budget — at a time.