Construction costs are currently skyrocketing

no, somehow not. If you assume the same repayment, the additional costs at 2.4% interest are exactly €1,000 per month. And whether I pay €1,666 monthly on €500k with 3% repayment or €2,666 makes a difference after all.

You can do the calculation like that, but you don't have to. In reality, our parents'/grandparents' generation probably didn't repay 3% either with 7% interest. If you just reduce the repayment, the impact, as described, is less dramatic. The thing is simply that quite a few home builders in the recent past have financed very close to the limit, meaning max. 2% repayment or even less with a rate that amounts to 35-40% of their income. Of course, for these people the train has now definitely left the station or they now have to cut significantly back.

I understand your joke... since the beginning of the year we have been retired and without the rat race I can certainly live to 80. We once had 220 m², back when our children still lived at home. Then we sold this house to a family with children. In 2010 we had a bungalow with 85 m² and now in 2022 we had a bungalow with 90 m² newly built. We don’t need more. But I also don’t need an apartment.

I find that good and right. But not everyone does it for a long time.

Last night I was still wondering... whether the colorful screen will come back again at 0:00? And then my thoughts turn to the uncertain future of the youth. Education and leisure activities will certainly be cut back quite quickly as well. A closed swimming pool would be, for example, one point. After two years of Corona, restrictions again in various areas.

No, somehow not. If you assume the same repayment, the additional costs at 2.4% interest are exactly 1,000€ per month. And whether I pay 1,666€ monthly at 500k and 3% repayment or 2,666€ does make a difference.

Explain THAT calculation to me. Sounds more like dyscalculia on your part.

Some people probably overlook the word full repayment.

500,000 € at 1.1% and 3.4% with a 20-year term and 0 euro residual debt as an annuity loan.

The required regular installment is:	2,321.85 Euros (monthly)
Total interest and fees:	57,243.25 Euros
Total cost:	557,243.25 Euros
Effective annual interest rate:	1.106 % p.a. (internal rate of return, IRR)

The required regular installment is:	2,874.17 Euros (monthly)
Total interest and fees:	189,801.17 Euros
Total cost:	689,801.17 Euros
Effective annual interest rate:	3.453 % p.a. (internal rate of return, IRR)

The math is roughly correct
Full repayment 20 years, 1.1% interest -> 4.50% repayment, €2333 rate
Full repayment 20 years, 3.4% interest -> 3.53% repayment, €2887 rate

But: Full repayment over 20 years is only accessible to a few. And even fewer received a 20-year fixed interest rate at 1%, presumably homeowners who already have a significantly above-average income. For the middle-class family, this is completely irrelevant. And even for high earners with extremely low interest rates, this is still an increase of almost 25%.

The math is approximately correct Full amortization 20 years, 1.1% interest -> 4.50% repayment, €2333 rate Full amortization 20 years, 3.4% interest -> 3.53% repayment, €2887 rate But: full amortization over 20 years is only feasible for a few. And even fewer have gotten a 20-year fixed interest rate at 1%, presumably builders who already have a significantly above-average income anyway. For the middle-class family, this is completely irrelevant. And even for high earners with extremely low interest rates, this is still an increase of almost 25%.

Good, completely correct that this doesn’t work for everyone. Then maybe again to what was brought up above as an example with the 3% repayment: Yes, with the amount of €500,000 and 3% repayment I come to a €1700 rate at 1.1% interest and to €2666 at 3.4% interest. But with 3% repayment at 3.4% interest I am done after 22 years and not like at 1.1% interest only after 28. If I also want to be done after 28 years at 3.4% interest, I end up with a €2300 monthly rate. That is then comparable, same loan amount and same term. And the €500 should have been factored in from the start.

Yes, you will need more equity. In my opinion, that's not a bad thing. The "oh, the municipality has a new building area, let's just apply spontaneously" is over. More supply for those who have been consistently saving for years with the goal of building/buying a house and not starting with 30k "equity". Everything is normalizing a bit again.

Here in the area (Munich commuter belt) there are places where you aren’t even allowed to apply for a building area if you have more than 150k equity. And preferably at least three children and active in five clubs. The plots, however, sometimes cost 400-500k. Luckily, we didn’t have this equity regulation. But I'm really curious whether they will now loosen these allocation guidelines, because otherwise it really only works if both parents work full-time (with a very good income) and the children spend the whole day in daycare.