According to the financing intermediaries Dr. Klein and Interhyp
Accordingly, in 2013 and 2014, more than twelve percent of property buyers each year took out ten-year fixed-rate loans with an initial repayment rate of only one percent. They have thus only repaid a very small portion of the loan amount so far.
“Given the significantly increased interest rates since then, many of these owners will not be able to manage the follow-up financing,” says Günter Vornholz, founder of the Institute for Real Estate Economics in Lüdinghausen. “We will see a number of distress sales of single-family homes and condominiums this year and especially next year, which will likely put further pressure on the already recently fallen property prices,” confirms Thomas Beyerle, chief researcher of the real estate investment company Catella...
The average interest rates for mortgage loans with a ten-year term fell from 2.5 percent in 2013 to 1.7 percent the following year.
The average mortgage in 2014 was 209,000; with an initial repayment rate of only one percent and an average interest rate at that time of just 1.7 percent, the new owners thus paid only 470.25 euros monthly for interest and repayment. However, if refinancing must be done next year, their remaining debt will still be 186,236 euros. If the average interest rate is still at the current 3.65 percent, these borrowers – with another initial repayment rate of only one percent (which the bank must also agree to!) – would have to pay 721.66 euros per month. So, the threshold households that were barely able to pay 1% repayment at that time will then have to pay at least 50% more. At 5% interest and the bank demanding 2% repayment, we are talking about 1,086 euros, thus 130% more or roughly 600 euros per month plus the increased costs for living expenses and energy since then...