It is a horror bill that the financial consultancy FMH has drawn up these days.

Actually, it's only about a few numbers, but anyone who has to deal with these numbers will get hot and cold down their spine.

Dennis Kremer

Editor in the “Value” section of the Frankfurter Allgemeine Sunday newspaper.

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The calculation goes like this: A building loan of 300,000 euros with a term of ten years and an agreed repayment of two percent still cost a house buyer 1.4 percent interest in March – making an installment of 850 euros a month.

At the beginning of June, the interest rate doubled to 2.8 percent, increasing the monthly rate for the same loan amount to a whopping 1,200 euros.

In this example, the amount of the monthly installment payment increased by around 40 percent within just a few weeks.

And that's not the end, since interest rates on ten-year home loans have actually increased to more than three percent.

Sharp change

The situation on the German house and apartment market has changed so quickly and so sharply that no one would have thought possible at the end of last year.

The building interest was not even one percent before the turn of the year, now they have more than tripled.

This was caused by the sharp increase in inflation and the expectation that the European Central Bank (ECB) will keep its promise and take action against it with higher key interest rates from July.

But just looking at the numbers does not adequately capture the drama of what is happening: people who just a few months ago saw themselves as future homeowners may now have to say goodbye to this dream.

It is a time of "rude awakening", according to the mortgage broker Interhyp.

But not only the dream of some German citizens of their own house could vanish into thin air.

On the contrary, something could happen that Germans haven't seen for years: rising interest rates could slow down the years of upward pressure on the housing market and, in extreme cases, even lead to falling prices.

This may seem like a glimmer of hope for those looking to become homeowners in the future, but it's important to know that higher interest rates will quickly erase the benefit of a slight home price drop.

The plateau has been reached

With their forecasts, many experts are cautious, who could blame them.

But some expect that the price level on the real estate market, figuratively speaking, could soon have reached a plateau.

For example, Michael Voigtländer, Head of Real Estate Markets at the German Economic Institute (IW) in Cologne, says: “Higher interest rates reduce the attractiveness of real estate.

If they continue to rise, I expect a slight correction in house prices in the short term.” A survey of real estate professionals by the IW and the Central Real Estate Committee ZIA even comes to the conclusion that there is a “massive slump in sentiment”.

And Jörg Utecht, CEO of the mortgage broker Interhyp, says: "We think it is likely that the rise in prices will level off,

prices could possibly also drop in some regions and segments.” The company is currently adjusting its interest rate forecasts on an ongoing basis.

All the signs that a lot on the German housing market is no longer what it used to be.

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