Where are the ECB's key interest rates heading?

What does that mean from a banking perspective?

Exactly. Previously, with a loan-to-value ratio over 80%, a minimum repayment of 2% was required; now one percent is sufficient. The calculated term decreases massively with 4% + X interest (at the current level it is only about 40 years).

You have already caught my attention several times with your strange opinions here.

A repayment rate of 1 percent and a loan-to-value ratio over 80 percent is already a very bad financing deal. Anyone who takes something like that is already living far beyond their means. And this is exactly where the extremely harmful effect of low interest rates on the national economy comes into play. The decade of cheap interest rates has led to major distortions and bubble formations. No one worried about rising prices, they just consumed. Without regard for losses.

The main thing was that the installment fit. Whether car, vacation, house or the new kitchen, it couldn't be expensive enough. 40-year terms and ideally 110 percent financing. Or in other words, many simply live beyond their means. It's that simple. Now it’s naturally going to get bitter.

Basically, inflation in Germany is still very high. 7.2 percent core inflation and over 17 percent food inflation compared to the same month last year. That is once again a big figure.

Added to this is the maximum possible insecurity of the population caused by the red-green government policy. Much more damage cannot be done.

Despite a declining money supply, prices continue to rise. I see an interest rate level of 8 - 9 percent as realistic. And that is what we will see.
Inflation will no longer be contained any other way. If, as can be seen in the beginnings, a wage-price spiral is now triggered, then we will see inflation rates of 20 - 30 percent, like in Turkey, and we will have to get used to very different prices.

I currently do not want to assess the real estate market, because there are simply too many political uncertainties. I am currently seeing multifamily houses offered at dream prices more frequently, single-family houses rather not. Overpriced townhouses and condominiums are also increasingly coming onto the market.

But my antennas are now picking up serious economic difficulties even among large companies. Economic downturn, reluctance to buy, high financing costs, exploding personnel and energy costs. I hear about impending liquidity shortages.

A repayment rate of 1 percent and a loan-to-value ratio of over 80 percent is already a very bad financing. Anyone who takes that on is already living far beyond their means.

1. The average equity contribution has increased by over 50% since the start of the interest rate rise and now stands at over 30% of the total investment costs.
2. Financing over 80% of the loan-to-value ratio is not per se a very bad financing. There are plenty of reasons to take advantage of such financings. The best example is simply young people, often academics with well-paid jobs, who unfortunately have not yet had the opportunity to save sufficient equity. In such constellations, the debt service capacity is often better than with "good" financings with lower exposure.
3. By the way, you keep falling for such pub talk here repeatedly.

I won’t even address the rest of your nonsense about 8-9% interest rates, etc. I prefer to discuss things seriously here.

P.S. Now it’s getting bitter? For whom? Those who have already built or bought have peace for the next 15-30 years, because only then does the fixed interest period expire. Those who want to build now also have no real problem. They either can afford it because they have the creditworthiness or they cannot. But the banking sector is already lending more restrictively again. And whether I manage 40 years term with 2.5% repayment or 1% repayment does not change anything. 40 years is a sort of limit that is common in the industry. In this respect, we are simply adjusting our framework data to reality.

It is almost schizophrenic to fantasize about a wage-price spiral with an inflation rate of 15% since February 2022, while IG Metall and IG BCE have secured a good 8% until the end of 2024...

In the last 10 years, there have been high collective wage increases without any inflation.

And especially in the case of food, we see price adjustments that lack any basis. Producer prices have long since fallen again. The gas price has dropped below pre-war levels...

There will be drastic interest rate jumps again now, and then things will go downhill. It has always been like this. After a sudden increase, a correction downward followed after a few years.
Simply because the realization will mature that the time of cheap energy for Europe is over. Interest rates won’t help either... on the contrary, the stifled economy will further drive inflation. Because rents continue to explode...

And especially with food products, we are seeing price adjustments that lack any basis. The prices for producers have long since fallen again.

However, it must be noted that the price adjustments in retail do not correspond at all to the adjustments made by the producers. Their price adjustments have not been fully passed on by retail (or they argue like Edeka and the shelves remain empty). This can be clearly seen in the retail margins of the major retailers, as far as publicly available (unfortunately not for Schwarz/Aldi – but I assume it’s no different there). The big producers are lining their pockets. It’s nice that prices for many food products have now come down significantly.

Yes, the monopolistic four as the advocate of the consumer. It almost brings tears to one's eyes.

Jokes aside. When I look at my shopping cart, some products are still almost twice as expensive as in January 2022. I really love eating Cheddar, whether from Kerrygold, Cathedral, or Hochland. 2.79 EUR for 100g.
This can no longer be fundamentally explained.

Be that as it may. The high interest rates do not curb this. How should that even work?
At the gas station, no one thinks, "Hm. 6% interest. I'd rather take the bike to work tomorrow. I can manage the 40km..."