Financing comparison: past vs. today

The average family then as now spends a percentage of, say, 40% of their income on the house. This means that the homeownership rate in Germany is still around 40%, which is relatively constant.

The average debt service ratio (surely across all, not just the new loans of the last 7 years) is 25%. And I am quite sure that the number of households still able to build or buy has drastically shrunk due to price increases in recent years, the current explosion, and interest rate hikes—if one does not go beyond 33% or at most 40% of household income. The consequences are likely to be interesting.

And back then you also received T€ 10 home ownership allowance on the existing property

I have claimed the home ownership allowance. If I’m not mistaken, it was €1250 per person over 8 years. However..

Recently there was Baukindergeld. I was able to simply take €36,000 with me. Got lucky.

… there is always some kind of subsidy. But what really mattered to me was the wrong salary, which I wanted to correct. 2400 DM! Public service and railway official, both working shifts, both reliant on one car each. Because the real numbers don’t look so rosy anymore, as the OP wants to sell us. 34% repayment… :eek: you have to see that something in the calculation is incorrectly presented.

But I did not take your case.
However, you only took out a 90K loan and not 180K. Therefore, your 2400€ income is also relativized. And obviously, you did not pay off 50% of the salary either.

The fact that you were still able to pay off a house with only 2400€ shows that it was much easier back then, even if the interest rate was higher. If you had the 9% interest rate, your financing probably would not have worked either.

Yes, the figures may not be accurate for 2000, I admit that, but the core statement remains correct that it was easier back then despite high interest rates.

What is strange about the 34% repayment, I do not quite understand, we have already repaid over 40% after almost 7 years.

And if you take the unhealthy 50% of the income for repayment as in my example, 34% is not unrealistic.
Even with your 180K and a rate of 1200€, a repayment of almost 45% results after 10 years.

Here's a little picture with the interest rates in the past:



so the 90s were around the 8-9% range
2000s 5-6% range
2010s under 4%
2015-2021 in the 1-2% range

of course, you can't really compare house prices... in the 80s-90s, real estate prices were stable despite inflation
then prices gradually increased.

partly due to higher demand, but mostly due to legal requirements (energy efficiency!)

what requirements must a house from today meet? and from the 80s? that already affects the price a lot.

and of course, craftsmen have raised prices above average in the last 10-15 years, which is well deserved.

and you must not forget currently... the "inheritance generation" is buying real estate, there is a lot of money... some people bring 200-500k in equity. even for the "average income" it doesn't matter if they only have to finance 200-300k and pay 2% or 3% interest...

But I don't quite understand what is supposed to be wrong with the 34% repayment, we have already repaid over 40% after almost 7 years.

But then it's going really well.

However, I believe you are making the mistake of thinking that repayment and remaining debt progress linearly over time. But that is not the case. The higher the interest rate, the more convex or curved the curve is. 9% interest and 1% repayment, after 7 years you still have 90% remaining debt and are debt-free after 30 years. That is why your remaining debt comparisons make so little sense.

What I don't quite understand is what is absurd about the 34% repayment, we have already repaid over 40% after almost 7 years.

By repayment one rather means the monthly percentage repayment.

But I did not take your case.

I know. But I think my example has the same original value in parallel, namely the salary of 2022: you calculated the 5000€ down incorrectly. In addition, I have no salary increases from 1999 until today, only inflation adjustments. For employees in the free market economy, with today's 5000€ you would even have to play lower if it concerns the salary around 2000.

Yes, the numbers may not be correct for 2000, I admit that, but in essence the statement remains correct that it was easier before despite high interest rates.

How do you come to that? We were at the average salary and bought ourselves a "modest" townhouse! That was just as frowned upon then as it is today. Back then, with 4.5% it was unthinkable to afford "more" house. House and child would not have been possible at all. (I am just thinking whether it was even 6% in 1999, then 4.5% in 2009, which I had to bear alone because of divorce with a salary of 1800€) Our repayment was about 1/3 of the household net income... It was not easier overall! However, one had more saving potential, because the technology was still somewhat more durable and a coffee machine and TV were not simply replaced like today. Things were still repaired, there were practically no mobile phones, ...

Therefore, your 2400€ income is also relativized. And you obviously also did not repay 50% of the salary.

Nothing is relativized. See above.

But the fact that you were still able to pay off a house with only 2400€ shows that it was significantly easier back then, even if the interest rate was higher. If you had the 9% interest, your financing probably wouldn't have worked either.

I wouldn't know that we were able to pay it off. No! It was sold at some point. What remained was slightly more than what was invested. If we had 9% back then, we could not have afforded a house back then. Period. I think about that, considering that 2400€ then are 5000€ today, would-be builders who now complain with 4000€ and 2% plus desire for children that they cannot build their 160 sqm with double garage because everything is so expensive. I don't know how old you are, where you stood in the year 2000, but even those who were already building or buying their nest back then had demands. 20 years are nothing and do not change you much. (At 30 you don't think differently than at 50, but you have more experience.) But today everyone somehow has to build equally big... Townhouses are out of the question, nothing under 160 sqm because without kids' bathroom and pantry the house would be social standard. The difference between 2 and 4.5% is practically nothing if you adapt your house to the salary and possibilities, also regarding interest. And that's why I stick to my point: consider whether "you" with the whining about whether 1, 2 or 3%... or even 5% are right. "Your" financial problems are in my opinion self-made because you want to live a standard of living that "you" fundamentally cannot afford.