“Throw” is deleted the horizon in the eyes of bankers and brokers in the European economy’s ‘atmospheric’ in relation to the progress of housing loans following its announcements last Thursday (7.3.24). Although the head of the ECB, Christine, said that the inflation figures will be waiting next June, German banks’ experts appear divided over the course of housing loans, with half seeing a decline from September 2024 – March 2025 and the other half seeing stability for the same period. And at the same time the German real estate market suffers from price reductions and the simultaneous lack of new housing. It is noted yesterday (08.03.24) that the head of the Bundesbank, Nagel, said that “we expect to achieve our 2% inflation target in 2025,” the head of the German central bank (Bundesbank), Joachim Nagel, said in statements of today’s German media. However, the head of the Bundesbank does not expect interest rates to be reduced until the following June at the earliest. “Trust is likely to be restored in the second half of the year. This is important so that the economy can grow again,” the President of the Bundesbank continued. According to Handelsblatt, the ECB’s monetary policy announcement Thursday (7.3.2024) and Christine Lagard’s press conference that followed immediately afterwards brought “frog” to those seeking clarity about the next moves and certainly a first reduction by June. The mortgage market is inevitably affected by the ECB’s decisions as the central bank’s basic interest rates also determines housing interest rates. Thus, as for at least the first half of the year there will be no reductions in ECB interest rates, experts are unable to arrive at how the mortgage market will be affected. With regard to Germany, in October last year, it seemed that housing interest rates could climb to 5%, but have since dropped well below the 4% threshold. According to the data of the construction finance company FMH Finanzberatung, the current average interest rate is about 3.5% – although it is slightly higher than in early January. The reason for the rise is the reduced hope that the ECB will decide very quickly to reduce interest rates for the first time this year. So what does the ECB’s decision on Thursday mean about further developments in real estate lending conditions? Experts predict how building interest rates will evolve over the next few weeks and months. “The waiting for interest rates to be reduced continues – perhaps more than previously planned,” says Thomas Peters (Tomas Peeters), CEO of the real estate broker Baufi24. The interest rates of the buildings have already invoiced the late development over the last month and a half – mortgage interest rates have recently increased again in sync with the bond market. According to Peeters, the best conditions for building interest rates are now at least 3.10% again, after reaching for a while the level of 2.90% at the beginning of the year. The expectation of the market that the ECB will need more time than originally assumed to reduce interest rates is becoming increasingly established, according to Michael Neumann, head of the real estate real estate real estate real estate real estate real estate real estate real estate company Dr Klein. “The market currently assumes that the first interest rate reduction will not come before the end of the second or early third quarter,” the expert explained. In this context, Dr Klein’s CEO is currently not expecting any changes in the interest rate horizon. Many of the market expectations for the ECB have already been assessed at mortgage interest rates. According to Neumann, this will tend to lead to further lateral movement of mortgage interest rates over the next few weeks – with the range of variation remaining low. Check24 expert Ingo Foitzik also expects stable conditions in the coming weeks – and not further decline. Banks disagree on long-term growth Most banks in a recently published monthly interest rate panel from the Interhyp real estate loan platform also assume that the building interest rates for ten-year loans will remain at the same levels, i.e. around 3.5%, in the short term for the next four weeks. On the other hand, experts disagree on the long-term perspective. Half of the respondents believe that in the medium to long term, i.e. over the next six to twelve months, interest rates on housing loans will be reduced to 3%. The other half expect interest rates to remain stable during this period, ranging between 3.5 and 4%. For prospective buyers, experts have a clear advice. “My advice to prospective buyers: Don’t wait too long, because prices could rise again over the next few months,” says Jörg Utecht, CEO of Interhyp Group. Neumann from Dr Klein also advises prospective buyers not to let much time go by. The current favourable level of interest rates already leads to market rejuvenation and demand for housing loans has increased significantly, he says. ‘Good time to buy property’ Buyers should take advantage of this. “Now is a good time to buy a property,” Neumann says. “But in my opinion, the window of opportunity is not too big. Interest rates move sideways for the foreseeable future. Waiting here for a downward trend is not appropriate in my view.” At the same time, rents continue to increase and demand for real estate will increase, the expert points out. And as demand is known to set the price, it expects property prices to rise again soon. Then it will be a matter of time before salesmen’s willingness to negotiate is reduced.
Horizon 2025 ‘showed’ the ECB to reduce interest rates on housing loans
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