Current interest rates for construction financing

Do not be unsettled by interest rate developments and fluctuating interest rates. We keep current conditions ready for you and calculate your personal interest rate as well as your monthly installment.

*effective annual interest rate for a term of 10 years — **possible monthly rate including 1% repayment
status 28.10.2022 / conditions subject to change

Explanation of the mortgage rates shown above

Assumption on the baufi-top interest rate

Our example shows the possible conditions for a property purchase with a loan requirement of 200.000 €. We assume a sustainable property value of at least 335.000 € and a repayment rate of 1.00 %. The fixed interest rate for this loan is 10 years and the assumption for the calculation further assumes the own use of the property as a residential property, a first-ranking security of the loan via a land charge as well as the payment in one sum. An impeccable income situation, a regular income in a non-terminated employment relationship and an overall good creditworthiness of the applicant are also required.

  • Net loan amount 200.000 EUR
  • Collateral value: 335.000 EUR
  • Fixed interest rate for 10 years
  • Repayment rate: 1.00
  • Payout: 100%
  • Debit interest rate: 3.72%
  • Effective annual interest rate: 3.81 %
  • Installment, monthly: 801,67 €

Since any fees and expenses (e.G.B. If you are not yet aware of the details of the partial disbursement surcharges, land registry costs and other costs that the borrower will have to bear in connection with the financing, the effective annual interest rate may increase accordingly.

Our current conditions with a fixed interest rate of 5 to 20 years are available under the following conditions:

  • Loan amount from 100.000 EUR
  • Repayment rate at least 1%
  • Mortgage lending value below 60%
  • Securing the loan with a first-ranking land charge
  • Asset and income situation/creditworthiness of the borrower – impeccable

Why do I not see an exact rate?
When applying for financing, various personal circumstances are used to determine the so-called credit rating. This credit rating determines the interest rate offered by the bank. These interest rate offers can therefore be quite varied. Therefore, we can only show you a certain interest rate range. For the exact calculation of your personal interest rate, we need further information. You can request a precise calculation here.

Development of interest rates for construction financing

Source: european central bank (ECB) / deutsche bundesbank

  1. You select the type of financing – whether for new construction, property purchase, debt restructuring or forward loan – and provide information on the costs incurred and, if applicable, on equity capital / personal contributions.
  2. Then enter the key data for your income, revenue and expenditure situation.
  3. On the basis of your information, we calculate the financing feasibility of your project and draw up your personal comparison – free of charge and without obligation

Mortgage rates influence construction financing more than most prospective borrowers realize. They have an impact on two crucial areas.

  • Financing costs: the higher the market interest rate, the more expensive construction financing becomes. Accordingly, it is advantageous to finance at the lowest possible interest rate.
  • Maximum loan amount: the monthly installment is made up of repayment of principal and interest. Higher construction interest rates lead to a higher interest rate, which leaves less room for repayments. The maximum amount that the bank will make available for financing will be reduced accordingly.

Current mortgage rates at a glance

In the field of construction financing, the interest rates change daily. Current conditions can be found directly in our interest rate table. There you can see interest rates in connection with different fixed interest rates. The assumptions on which the interest rate calculation is based can be found below the table.

Depending on the project and credit rating, the interest rates of different financing offers vary. Take advantage of our free service – we will be happy to calculate your interest rate conditions and evaluate current interest rates from over 600 financing partners.

Interest rate development

The development on the interest rate markets is difficult to forecast. This is due to the numerous factors that influence interest rates. In the following we have explained the main influencing factors for you.

Interest rate policy: the interest rate policy of the european central bank (ECB) has by far the greatest influence on the development of interest rates. It sets the lending rate and thus controls the level of interest rates on the markets.

Federal bonds: the interest rate charts in the field of construction financing resemble the charts of federal bonds. While they are not exactly the same, there is a strong similarity. In this context, it is noticeable that the interest rates of the federal bonds are often ahead. If the interest rates for federal bonds and pfandbriefe rise, there is a high probability that the mortgage interest rates will develop similarly in the following period.

Economic situation: the ECB's interest rate policy is strongly influenced by economic activity. One of the ECB's tasks is to support the economy within the EU. Especially in times of a weak economy or even a recession, it is common to lower the ECB's key interest rate in order to reduce financing costs in the economic sector and to provide a stimulus. If the economy overheats, the central bank can counteract the development with an interest rate increase.

Demand for loans: because interest rates are primarily controlled by the ECB, the influence of supply and demand is not quite so great. At a small level, the demand for real estate loans is nevertheless noticeable. It affects the competition that exists between lenders. In times of low demand for construction financing, banks are more willing to lower their margins and thus boost business.

Special events: history teaches us that unpredictable events can also have a major impact on interest rates. This is especially true for sudden crises, such as those caused by the corona pandemic. Such events are rare, but can change the interest rate level significantly.

Comparison of conditions and feasibility

You want to know more about how much money the banks are giving you for construction financing?? Use our comparison, we determine your financial framework without obligation.

How will mortgage rates develop??
One hundred percent reliable interest rate forecasts do not exist. No one can foresee the development of interest rates and thus make precise statements. This also applies to us, which is why we cannot make any predictions about the development of mortgage interest rates at this point.

Should I wait for the development of the interest rates or finance immediately?
Since interest rates cannot be predicted with absolute certainty, this is not an easy decision to make. The relevant question is, above all, until which point in time the real estate loan is needed. The sooner the financing needs to be in place, the sooner the interest rate should be fixed.

How then to secure favorable interest rates for construction?
There are various strategies for interest rate hedging. Which one is recommended depends on the individual case. If you want to take out construction financing for your property in a timely manner, you should focus on comparing interest rates.

Practice shows that the interest rates in the field of construction interest rates fluctuate significantly depending on the bank. If you sign a financing agreement with your house bank prematurely, you risk an unnecessarily high interest rate, which leads to corresponding interest costs. It is better to get certainty by comparing interest rates. We are happy to provide support here, after all we can evaluate current loan conditions from over 600 financing partners.

Should not be in a hurry or. If financing is not planned for several years, alternative instruments for interest rate hedging may be advisable. A classic is the building savings contract. The conditions agreed in the contract are fixed. It then no longer matters how the interest rates develop. However, if mortgage rates fall in the meantime, it may make sense not to take out the building society loan and instead have the credit paid out and take out a classic annuity loan.

How can I protect myself against rising market interest rates??
Most real estate loans are linked to a fixed interest rate, d.H. Interest rate expires at the end of this period. This is accompanied by an interest rate risk: if interest rates have risen in the meantime, there is a risk of higher costs for follow-up financing. In extreme cases, it can jeopardize the entire financing.

Particularly when financing starts with low repayments, it is advisable in most cases to agree on a long fixed interest rate. This allows borrowers to repay over a long period of time and reduce the remaining debt amount without fear of an increase in interest rates.

What options do follow-on financiers have?
In the case of follow-up financing, the decisive factor is how the mortgage interest rates have developed since the start of the fixed-rate period. Should they fall significantly in the meantime, a forward loan may be an attractive option. This makes it possible to secure the interest rate for subsequent financing several years in advance.

Comparison of conditions and feasibility

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