I am also at about ~2.5% at the end of 2031, then my follow-up financing will start. There would be some leeway up to about 3%, then it would have been cheaper for a longer period. Of course, at this point, the significantly improved loan-to-value ratio should also work in my favor.
So we closed last year and the interest rate can rise to 5% in 15 years for all I care, no problem. People just have to realize that a home is not an investment for returns, but pure luxury – and pay down the loan accordingly.
How do you see your forecast for interest rates in 6 and 10.5 years?
Unlike today ;) There are, however, some indications that interest rates will continue to rise over the course of the year. The market is already pricing in quite a bit, let's see if it proves correct. In my opinion, all of this has its limits; too high interest rates are not sustainable anyway given the national debts. We had previously also discussed a 20-year fixed interest rate here. A yield curve can also become steeper again at times.
So we closed last year and the interest rate can rise to 5% in 15 years for all I care, no problem. People just need to realize that a home is not an investment property, but pure luxury – and accordingly repay heavily.
If they can, that is. That’s exactly the point with such a long-lasting bubble. Budgets are often already maxed out and overstretched, repayments too low. And now inflation comes. Which strangely does not automatically pay off the mortgage, but rather squeezes the disposable household income. Whether the hoped-for inflation compensations in income will become reality is up in the air. Because a 4-5% wage increase for 2020 and 2021 each is not likely to be the rule. And world politics is just beginning to change, how well Germany is prepared for this remains to be seen – Corona might have been a first small indication. The not really solid approaches in recent years have been: the upcoming inheritance (often in the form of a property that is yet to be inherited & sold), the lowest repayments + hope for further book gains, essentially rent without risk with fixed profit through sale after exiting in x years, or – “in 10 years the interest rates won’t rise, I’m relaxed about it, if necessary I’ll just sell” (ignoring the toxic situation of rising interest rates and falling values). The Bundesbank has already raised its bubble ratio – instead of 30% it now states 40% as the share of hot air in the values.