A couple wanted to take out a loan for their dream house. With a term of 30 years, almost twice as much would have to be repaid.
The time to fulfill your dream of owning your own home has probably never been worse than now: As reported, the European Central Bank has had to raise the key interest rate several times due to the enormous inflation. The era of the zero interest rate policy thus came to an abrupt end. The key interest rate has recently been at 3.0 percent.
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Loan interest rates high
What makes savings book friends happy also drives thousands of people to the subsistence level. Namely those who have a loan to pay off – especially with a variable interest rate. Real estate experts expect that numerous houses will come onto the market this year or have to be foreclosed on – more about that here.
And potential buyers are also in a rather bad mood due to the new lending guidelines and the high interest rates. A couple (34, 35) from the industrial district told “Today” about the sobering bank appointment: “We need 400,000 euros to finance our dream house.
With a term of 30 years and a 50:50 split between fixed and variable interest rates of 4.4 percent, we would repay a total of EUR 722,000. That’s crazy!” The Lower Austrians now want to wait and see and hope that the situation will soon relax again.
The principle behind the rate hikes
On “Today”A financial expert asked: “The ECB will certainly lower the key interest rate again as soon as possible.” In this case, “as soon as possible” means after the inflation crisis.
Because the reason for the multiple increases in the key interest rate is the enormous inflation. Higher interest rates should help to stabilize prices again. The principle behind it: When interest rates are high, on the one hand, loans become more expensive – so less is invested/bought – on the other hand, households reduce consumption and try to save more (the classic credit interest that you get with a savings account). This in turn reduces demand on the market and subsequently leads to falling prices.
