In the fight against inflation, the ECB has raised the key interest rate again. Those who suffer are homebuyers. The loans could get even more expensive.
Hamm – In the fight against inflation, the European Central Bank (ECB) has increased the key interest rate in the euro area by 0.5 points to 3.0 percent. In March, the monetary authorities want to follow up with a further increase. This is all good news for savers, but bad news for homebuyers. Because the loans are becoming more expensive, which is particularly noticeable in real estate financing.
| authority | European Central Bank (ECB) |
| president | Christine Lagarde |
| Headquarters | Frankfurt am Main |
| founding | 1. June 1998 |
The ECB raises the key interest rate again – a horror for home buyers
The most recent interest rate increase is the fifth since July 2022 – from 0 percent at the time to 3 percent now. A further increase to 4 percent is expected by the summer of this year. This is an attempt to slow down the enormous inflation. In January 2023, it was 8.5 percent and was still a long way from the 2 percent that the ECB would like.
The mechanism behind a rate hike is quite simple. Banks have to pay interest when they borrow money from the European Central Bank. As a result, less money should come into circulation, which will strengthen the value of the euro. The higher the key interest rate, the greater the effect. That’s the theory.
Economists and representatives of banking associations and industry in Germany think the course of the central bank is great. Savers also benefit from rising interest rates for overnight and time deposits – at least in theory, because interest income is currently being eaten up by inflation. For real estate buyers, however, the decision is a horror. They have benefited from fantastic conditions when financing their properties in recent years – but that is over.
The ECB’s interest rate increase makes mortgage lending more expensive
While the ECB’s recent interest rate hike has not had a direct impact on homebuyers, it will make it more expensive for banks to borrow money from the central bank. And to make up for that, they could charge even higher interest rates on home loans.
This is exactly what experts assume. “As a result, interest rates for real estate loans will probably continue to rise and the pressure on the residential real estate market will increase again,” said Oliver Wittke, general manager of the Central Real Estate Committee (ZIA). real estate world. In the case of current mortgage loans, on the other hand, nothing changes.
For potential homebuyers, it’s not the first shocking news. In early 2022, the rate was around 1 percent for 10-year mortgages. Now, a year later, almost 4 percent are already due. The end of the road has probably not yet been reached for building interest rates.
After all, the butter on the shelves of discounters is getting cheaper. There is a threat of a discount battle for cheap prices. Apart from the ECB interest rate increase, people in Germany have to adapt to further changes, such as beer prices, compulsory masks and energy-saving lamps.
