Process schedule at Commerzbank for construction financing

I’ll add something about 20 years with 3% repayment via Commerzbank home financing homepage. Mid 02 / 2022 .. 1.77% (online) - branch offered me 1.83% End 03 / 2022 .. 2.63% (online)

This is already quite steep and could mean the breaking point for not a few financings if the interest rate continues to march towards 3%. We’re talking about several hundred euros more each month to be paid for the repayment. It could of course also be that shorter terms are now simply being accepted more frequently, which in turn of course significantly increases the risk again. I am really curious whether this will eventually also have an impact on purchase prices/construction prices when financing repeatedly fails because the bank’s valuation and the purchase price are simply miles apart or because the household budgets just don’t add up anymore.

..., which additionally have to be paid monthly for the repayment.

Initially, they only have to be paid for the interest and only later turn into repayment. ;) okay. that was a bit too pedantic.

according to my information, there is no real decline in financing to be observed yet. Business and inquiries continue at an extremely high level. Is that correct, or are the first effects noticeable?

"According to my information, there hasn't been a real drop in financing yet. Business and inquiries continue to operate at an extremely high level. Is that true, or are the first effects being noticed?"

So the demand is still there, but people have more equity.

A few years ago, people financed with less equity; now they bring 20-30-40 or sometimes even 50% equity. That means the volume when selling properties is rising, but the financing volumes are not (more equity!)

But a buddy of mine, who is a developer (but only builds single-family homes), said that in the first 2 months of 2022, his house sales dropped by 80% compared to 2021. But that is probably because he had 5 price increases alone in 2021 (so it’s due to production costs).

And the interest rate increase apparently puts the finishing touch on it. (If people can only afford a loan with the same rate that is 100,000€ lower (or even less) than 2-3 months ago, and costs are rising.)

Yesterday I also talked to my contact at the "Dutch," and they have tightened the framework conditions over the past few months, making financing more difficult there. He assumes that currently for a few more months, brokers will still try to sell properties at the highest prices, but if they start to stay longer on the market (online), prices will fall (or rather: the prices won't fall, but the surcharges that sellers/brokers have put on, here in the Rhineland 20-30%, will probably be lower).

And he rather sees the problems coming in a few years: properties that were financed very cheaply since 2015 (i.e., with 2-1% interest) and often with 1% repayment, when they now come to follow-up financing and suddenly 3-4% interest rates come + the bank requires 2-3% as minimum repayment, many won't be able to afford that...

Thank you for your assessment. The pressure from the general contractors / home construction companies on us is very high and they are threatening with the next increase if the contract is not signed within x days. One home construction company was so bold that they charged an additional approx. 250,000 euros on top of the regular price. (Single-family house with 200 sqm) In the phone conversation, "Our business is running smoothly, why should we lower the price."

I am very curious to see how the current situation will continue to develop. Currently, the order books are full with KfW55 projects.

yes, I think they will be fully busy in 2022,
but if 50% fewer houses are sold in 2022, the companies will probably feel it in 2023/24.

I know developers or construction companies that are already booked 1.5-2 years in advance, meaning they probably won’t feel it until 2025...