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If you don’t just want to dream of your own home or apartment, you have to spend ever increasing amounts of money. This is shown by the current “Dr. Klein Construction Financing Trend Indicator” (DTB).
In addition to rising real estate prices, house builders are faced with increasing ancillary purchase costs.
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Since Corona at the latest, rising real estate prices are no longer limited to central locations. The ancillary purchase costs, which are largely covered by equity, also increase proportionally. That means higher loan amounts. These reached a new record in February 2021: the average mortgage loan was around EUR 304,000. In February, the standard rate increased, which is calculated as a comparative value for a loan with the following parameters: EUR 150,000 loan amount, two percent repayment, 80 percent loan-to-value ratio and ten-year fixed interest rate. At 381 euros, it is above the previous months and just below the mean of the previous year (385 euros).
Lots of equity when buying real estate
The Germans still raise a lot of equity when buying real estate. One reason is the future owners’ need for security. In addition, lenders rarely finance more than the purchase price and, depending on the individual case, expect additional equity. However, the 20 percent formula that was used earlier no longer applies.
With an appropriate credit rating and reliable income prospects, the financing of the entire price is quite possible at good conditions, explains Michael Neumann, CEO of Dr. Klein Privatkunden AG. The loan-to-value ratio is currently 83.7 percent, which is less than in the past eight months. The loan-to-value ratio refers to the debt-financed portion of the loan-to-value, which in many cases is not identical to the purchase or prime costs due to the bank’s haircuts. The current data on the initial repayment amount and the average fixed interest rate are at 2.8 percent and 13 years and four months at the level of the previous month.
Forward loans are growing slightly
Forward loans currently play a relatively minor role in real estate finance. With this particular form of financing, borrowers receive the current interest rates on a loan in the future. For a surcharge of currently around 0.015 percentage points per month, you can protect yourself against rising interest rates.
In February, the market share of forward loans increased by 0.5 percent to around 5.5 percent, but the level remains low: the value has only been in single digits since mid-2018, and in February 2017 they reached their high of just under 20 percent. Surcharge-free annuity loans remain the undisputed favorite among construction finance with almost 83 percent of the shares and at the level of the previous month.
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