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Due to the increase in interest rates and construction costs, consumers are hesitant to buy building land (archive photo). © Jan Woitas/dpa
Many people turn to low-cost KfW loans in addition to bank loans to make their dream of owning their own home come true. But the right timing is crucial, as interest rates fluctuate greatly.
Frankfurt – Building a house can be expensive these days: According to data from the ING bank, the average cost is almost 500,000 euros. Many people therefore use private bank loans as well as low-cost loans from the state development bank KfW to finance their project, if this is possible for their project. However, current figures from the Central Property Committee (ZIA), which are available to the Handelsblatt It is important to note that KfW’s interest rates can fluctuate significantly. The key factor here is the right timing.
Save more than 10,000 euros with a combination of KfW and private bank loans
The Frankfurt-based KfW Institute offers loans with low interest rates to create climate-friendly extensions or new buildings, often up to 100,000 euros. This is made possible by government subsidies that keep the interest rate low. But KfW loans also support business start-ups and studies.
Stiftung Warentest recommends in particular the combination of KfW loans with loans from private banks. According to the report by the German consumer organization, some banks offer their own loans at more favorable conditions when combined with a KfW loan. Borrowers with little equity can save more than 10,000 euros this way. For example, if you need a loan of around 400,000 euros to build a house over 10 years, the benefit of a KfW loan could be around 12,500 euros.
Interest rates up to 2.79 percent – interest burden at KfW fluctuates significantly
According to the Handelsblattwhich spoke to ZIA President Iris Schöberl, the right timing is crucial for taking out a loan from KfW. “The interest burden on the important ‘Climate-Friendly New Building’ (KFN) program has fluctuated greatly in recent months – and has also deviated from the trend in general construction interest rates,” reports the Handelsblatt.
According to calculations by the ZIA, the interest burden on real estate loans has tripled on average to date: In September of last year it was still at 0.8 percent, today it is 2.4 percent, as Schöberl explains. In the meantime it even reached a high of 2.79 percent. These fluctuations can have significant effects: For a KfW loan of 150,000 euros, the interest is around 1,200 euros at an interest rate of 0.8 percent, and at 2.4 percent it is already 3,600 euros.
ZIA President calls for more planning from the Federal Government
According to the ZIA, the interest rate has been adjusted at least 15 times since March 2023. “This makes long-term planning of construction and investment projects more difficult,” explains Schöberl, who sees this as a decline in the willingness to invest. Although the federal government is still sticking to its goal of building 400,000 new homes annually, the Munich-based Ifo Institute is forecasting only around 175,000 new buildings for 2026, compared to 300,000 in 2022.
“We will ask the federal government to give investors more planning flexibility in the new KfW programme ‘Climate-friendly new construction in the low-price segment (KNN)’,” explains Schöberl in an interview with Handelsblatt. The federal budget for 2024 and 2025 allocates one billion euros each for the KNN funding program. However, Schöberl considers this to be insufficient and stresses that at least three billion euros would be required.
