ECB lowers the key interest rate again

The European Central Bank has once again eased its monetary policy. It lowered the key interest rate to zero percent. At the same time, it increased the penalty interest rate on bank deposits from 0.3 to 0.4 percent. Additionally, it is expanding its bond purchases. The measures are intended to stimulate the economy.

Source: tagesschau.de

What do you think, how will this affect construction loan interest rates in the short term?

Sometimes they go up, sometimes down again...

Sorry, I unfortunately misplaced my crystal ball somewhere today.

Seriously:
We've had this discussion a few times already. It doesn't necessarily have to have direct effects. Finance when it's the right time for you. Don't get upset if the interest rate is slightly lower later. Rather, be happy if it is a bit higher afterward. But none of that really helps you. Interest rates are generally so low at the moment that many others are certainly jealous. But what does that change? NOTHING.

In my case, I need the loan in May/June 2018.

I am slowly beginning to wonder whether a forward loan might make sense.

Sometimes they go up, sometimes down again...

Up and down. ;)

Often such decisions are already factored in beforehand. It really didn’t come as a surprise today; all experts agreed on what was officially announced today.

My personal impression is that interest rates will remain favorable in the medium term as well. So there is no turnaround in sight yet.

I find it more interesting how negative interest rates affect retail banking. People have become accustomed to 0% interest on deposits or occasional fees here and there, but what do you do, for example, with a €10,000 fixed-term deposit account where you might suddenly have to pay a “penalty” of €50 every year? :mad:

There are already a few banks that have passed on the penalty interest. However, only to customers with large deposits. That immediately caused a stir in the press. The aim is to ensure that consumption/financing happens regardless. But if banks, in order to avoid paying the penalty interest, prefer to take on higher risks and grant risky loans, the next financial crisis with loan defaults is once again right at the doorstep. Then everyone will complain again about the greedy banks that grant loans at all costs.

The interest rates are already extremely favorable! 10 years at 0.95% eff, 15 years at 1.31% eff, 20 years at 1.56% eff, 30 years at 2.00% eff (source DTW-Immobilienfinanzierung at approximately 50% loan-to-value). I am currently leaning towards the 15 years at 1.31% - which would mean a total of €20,000 in interest for my entire construction project. Of course, I could get annoyed if in 2 years I would only have to pay €15,000 in interest - but somewhere the banks have to make a profit, so I don't see much room left for rates to go down...