It's an exciting struggle.

Anyone building at the moment wants to secure the extremely low interest rates for as long as possible.

At the same time, the prices for everything to do with construction have recently risen than they have been in 51 years.

Accordingly, real estate prices are now also being driven high from this side - after the housing shortage and low interest rates had already caused them to rise sharply, especially in the big cities.

Christian Siedenbiedel

Editor in business.

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One consequence of the unbroken run on houses and apartments: The volume of building finance in Germany is also increasing.

The management consultancy ZEB, which specializes in banks in particular, reports in a rather extensive building finance study, which the FAZ has exclusively received in advance: Since 2013, the volume of all building finance in Germany has increased from 1.005 to 1.326 trillion euros, i.e. by around 32 percent.

The new business of the banks thus increased in the same period from 169 to 247 billion euros per year, i.e. by 46 percent.

What is remarkable is that the banks' mortgage lending margin has increased noticeably on average - the institutes earn better from it.

And apparently not despite the low interest rates - but precisely because of them.

It is often said that rising interest rates are good for banks and drive their share prices because a higher interest rate level for financial institutions means that more interest margins can be squeezed off. However, there also seems to be the opposite effect in mortgage lending. Since 2018 in particular, the banks' margin in new construction loan business has increased significantly, as the study shows (see graphic). But the inventory margin is also higher today than it was eight years ago.

Ulrich Hoyer, partner at ZEB in Munich, explains it like this: "The cost of refinancing building loans for the banks has on average fallen more than the interest for the borrower." - For borrowers, on the other hand, there are generally no building loans with negative interest rates.

In the case of follow-up financing for building loans in particular, the banks are currently able to enforce higher margins than in previous years because of the “visual impression” of lower interest rates, says Hoyer: “If someone has paid 3.5 percent for his construction loan and the follow-up financing is given to him for 1.2 percent, then he might not look too closely - even if that should be quite a lot, measured against the conditions of other banks.

At the same time, however, the banks have to deal with the fact that their customers want to fix interest rates longer and longer.

Many borrowers would prefer 30 years, says Hoyer.

In practice, the average term of home loans has risen from around 7.5 to 8.5 years, fixed interest rates ten years ago to ten to 15 years today.