The purchase of a property is certainly one of the most serious transactions in the entire life of a person. For this reason, the acquisition of a home often leads to extensive headaches. Of particularly high impact is, in addition to the purchase price of a property, the financing and the accompanying construction interest rates, which have changed significantly in recent months.
Since the beginning of 2022, the interest rates of construction loans are rising rapidly, making it difficult for many interested parties to obtain their desired loan to purchase their dream home.
Because of inflation, the European Central Bank regularly increases the key interest rates. At this rapid increase in the prime rates, the banks are also oriented to the determination of the construction interest rates, which currently continue to rise. Also the risen energy costs as well as geopolitical crises produce uncertainties in the economy and take so likewise influence on the building interest.
How high are the current construction interest rates compared to the former construction interest rates and how will it continue with the construction interest rates in the future?
Thanks to the interest rate policy of the European Central Bank (ECB) in recent years, the key interest rates fell since the end of the financial crisis from 2008 more and more. This way of dealing made it possible for banks to borrow money from the ECB for less interest charges. Conversely, this meant that in the past decade banks were able to grant loans at lower interest rates. Construction loans could also be granted with lower construction interest rates. While real estate prices were constantly on an upward trend, construction interest rates fell, which made it easier to obtain loan financing. In January 2022, construction interest rates were at an all-time low. For a loan term of 10 years, construction interest rates were just 0.4% at the time. In time with a rising inflation rate that began in February, construction interest rates also rose rapidly: Within half a year, construction interest rates rose to 3.16 percent for a loan term of ten years. Thus this is the same percentage difference in six months, for which the building interest with sinking in the previous years say and write ten years needed. This level of construction interest rates at 3.16% for a loan term of ten years, there was namely last at the beginning of 2012.
After a short, unexpected decline in construction interest rates in July and early August 2022 to 2.87%, construction interest rates rose again to currently 3.82% for a term of ten years.
Prognoses of many lenders like among other things the alliance, the Commerzbank as well as the German bank proceed in the next weeks from a slight rise of the building interest, while to the end of the year again with faster interest rises is calculated. Current construction loans could thus be significantly cheaper in terms of construction interest than the construction loans of the future, which speaks for a timely real estate purchase.
Where you should pay most attention when taking out a loan regarding the construction interest
The most cost-effective is a real estate purchase logically via a direct purchase price payment from equity to avoid the construction interest. Who has enough assets, accordingly saves the annoying construction interest - that is quite clear.
As probably the majority of interested parties in a real-estate purchase are dependent on bank loans with the associated construction interest rates, it is important to deal with the topic in advance at least as profoundly as with the property whose purchase one is considering. On the whole, it can be said that higher repayment rates keep the burden of construction interest lower. The faster one pays off a high credit, the less building interest comes on one.
Get an estimate of real estate experts in Pasing near Munich
If you intend, or with the thought play to take up a building loan with as small as possible building interest, we would like to you gladly our company-owned Finance Department VON POLL Finance which offers you qualified, comprehensive and institution-independent financing and insurance advice. Let our trained specialists advise you on the topics of construction financing, hedging and construction interest rates and benefit from our top conditions with over 500 lenders.
Kommen you in this regard gladly to us. We will be happy to establish contact and look forward to hearing from you.
