Residential real estate prices in Germany have been rising rapidly for years.
Anyone watching this without a home could only become envious of all those with property who got richer year by year.
But there was one consolation.
Interest rates.
They have gone down year after year.
Those with property still had to pay three or four percent for their loans when they bought them, in the past even more.
In 2020 and 2021 it was only 1 percent.
Those who bought late could at least finance it cheaply.
That's how everything balances out.
But the times are over.
Real estate prices are still high.
But their financing is no longer dirt cheap.
The European Central Bank is still hesitating with its turnaround in interest rates.
But it has long been a reality on the markets.
For loans with a term of 20 years, there is often no longer a 1 in front of the decimal point as it was in January.
In the meantime, the 3 before the comma appears more and more frequently.
For a ten-year term, it went up from 0.9 to 2.1 percent on average – the interest rate has more than doubled in three months.
This messes up some calculations.
In the first ten years alone, 30,000 euros in interest is added to whoever takes out a loan of 300,000 euros.
Instead of only 20,000 euros in interest, 50,000 euros are due.
The dream of owning your own home should therefore be carefully recalculated.
The banks are reassuring that the real estate market in Germany is solidly financed.
But those who are willing to buy are already reacting with shorter terms and lower repayment rates.
In short: your budget is simply limited and you have to increase the risk and postpone interest rate risks and repayment burdens into the future.
Interest plays an important role in the calculation of buying or renting.
If it is increasing as quickly as it is currently, and building is also becoming significantly more expensive, it may make more financial sense to stay in the tenancy.
This may not be the dream of a lifetime, but it can save you from financial nightmares.