Building interest rates have been falling for weeks – for property buyers with very good credit ratings, they have now fallen below the three percent mark, according to a new study. This is shown by an evaluation by the comparison portal Check24.
At the beginning of the year, the best possible interest rates for ten-year building financing were 2.93 percent – 0.36 percentage points lower than on December 1, 2023. “The lower yields for ten-year federal bonds and the easing inflation are causing building interest rates to fall,” said Ingo Foitzik , Managing Director of Construction Financing at Check24. “The banks have already priced this development in.”
Thanks to the lower interest rates, property buyers can save a lot of money: with a building financing of 400,000 euros and the best interest rate of 2.93 percent annually, Check24 calculates that interest costs will amount to 104,569 euros by the end of the ten-year fixed interest rate. The monthly rate in this case is 1,643 euros. Compared to an interest rate of 3.29 percent at the beginning of December, buyers saved 12,673 euros in interest costs with a monthly rate that was 120 euros lower.
Stock exchanges are hoping for key interest rate cuts
There are great expectations on the capital market that the central banks will lower key interest rates in 2024 if inflation falls. The inflation rate in the euro zone, which is crucial for the European Central Bank (ECB), rose again to 2.9 percent in December. But inflation tended to weaken over the course of 2023 – it was still at a record high of 10.7 percent in autumn 2022.
The yields on ten-year federal bonds have fallen sharply since their high in the fall – and with them the building interest rates that are based on them. For real estate loans with a ten-year term, the Frankfurt-based FMH financial consultancy has observed a decline in building interest rates of around 0.8 percentage points since the end of October.
When looking at the average building interest rates over ten years, Check24 comes to a value of 3.16 percent. With financing of 400,000 euros and this interest rate, interest costs of 112,670 euros would arise until the end of the ten-year fixed interest rate, the comparison portal calculates. The monthly rate is then 1,720 euros. Compared to an average interest rate last December of 3.34 percent, property buyers saved 6,329 euros in interest costs with a monthly rate that was 60 euros lower.
A lot of downward pressure on interest rates has already been anticipated
Check24 expert Foitzik does not expect the trend of sharply falling building interest rates to continue. “We expect a sideways movement rather than a sharp fall in interest rates in the next few weeks.”
Economists at Deutsche Bank see building interest rates rising again over the course of the year. Analyst Jochen Möbert expects that inflation in Germany could remain above 2 percent even in light of rising wages, which is why mortgage interest rates should rise again during 2024. By the end of 2024, he expects 5-10-year mortgage rates to rise again to 3.8 percent, he wrote in a recent study.
