Lower interest rates: Is now the right time to save on your loan?

Interest rates on real estate loans fell significantly in 2024 – a big difference from the peaks experienced by borrowers last year. While the average interest rate in November 2023 was around 4.5 percent, according to Interhyp, banks are currently offering interest rates of around 3.3 percent for 10-year loans and around 3.56 percent for 20-year loans, depending on the term and credit loan. This difference is very striking. Can you benefit from this now? In Germany there are some special features that you should pay attention to. Andreas Schankweiler, team leader and financial advisor at Interhyp, provides guidance.

Scenario 1: You took out your loan more than 10 years ago

The following applies to Germany: If you have been servicing your real estate loan for more than 10 years, you can cancel it without any early repayment penalty and possibly refinance at a better interest rate. Schankweiler explains: “After 10 years, customers from Specific right of termination provided by lawwhich allows them to finalize the construction financing. However, this is only worth it if the interest rate is significantly lower than before.”

For example, if you took out a loan for 15, 20 or 30 years in 2015 with an interest rate of less than 2 percent, refinancing is not a sensible option with current interest rates around 3.3 percent for 10-year loans.