Lisa-Marie Laufenberg from Offenbach has been looking for real estate for almost two years. The 26-year-old's dream: a home with three to four rooms and a garden or balcony. The hitherto low interest rates have also allowed real estate prices to continue to climb. A terraced house in Offenbach's new development area can easily cost 800,000 to 900,000 euros. "At the back is the expressway and the planes are flying overhead," says Laufenberg about her viewing appointments.
Mortgage and mortgage rates have already risen
And now interest rates are rising. Because for people who dream of owning their own home, the turnaround in interest rates has already begun. Lending rates were below one percent for a long time, and people had almost gotten used to that. But that's in the past now. Earlier this week, a 10-year loan cost 1.24 percent interest. "This is due to the fact that interest rates on ten-year government bonds, which are relevant for the pricing of mortgage loans, have risen significantly in recent times," explains Stefan Schneider, chief economist for Germany at Deutsche Bank Research. The chief economist at the state development bank KfW Fritzi Köhler-Geib assumes that this trend will continue and that interest rates will continue to rise slightly.
This would then in turn be felt by borrowers. Because just a few percentage points can quickly add up to thousands of euros for real estate loans that are often very high. Lisa-Marie Laufenberg describes rising interest rates and constant real estate prices as the "worst-case scenario". She therefore hopes that real estate prices will fall and that interest rates will rise only slightly. Until then, Laufenberg has put the dream of owning a home on hold for the time being. She and her husband just moved into a new apartment – for rent.
Rising interest rates on savings are also possible again
Martin Orben from Schöneck in Hesse paid off his house loan next year. He even hopes that interest rates will rise. Because the money that he saved as a reserve for repairs to the house or the driving license of his two daughters in his call money account is currently even less due to inflation, and there is a risk of penalty interest. "The fact that I still have to bring money with me so that someone will keep my money is of course a whole new dimension," says Orben.
But times were different: in 2002 he still received 4.1 percent interest on his money market account. At 50,000 euros above the exempt amount, you currently pay even minus 0.5 percent, i.e. penalty interest: In this case 250 euros per year. Even an interest rate increase of one percent would yield 500 euros in interest per year. If the value rose to 4.1 percent, as in Orben's old money market account, it would even be 2050 euros in interest per year.
But it will probably be some time before savers can finally hope for a positive sign again. It's not that far this year, says the chief economist at ING Germany, Carsten Brzeski. "But in the course of 2023 it should finally be ready".
High inflation rate brings interest rate turnaround in sight
And anyone who is now wondering: "Interest rate turnaround – why actually?" You only have to look at the inflation rate. Last year it was 3.1 percent in Germany. The consequences for financial experts like Professor Volker Wieland from Frankfurt's Goethe University are clear: "Due to persistent inflation, it can be assumed that the ECB, like other central banks – maybe a little later – will have to tighten its monetary policy and then maybe interest rates too at the end of the year," said Wieland, who, as a member of the Advisory Council, is one of the most important advisers to the federal government.
There will only be a turnaround in interest rates if the inflation rate falls sharply again and approaches the European Central Bank's target of two percent. The chief economists of six large banks in Germany, who were interviewed by the ARD business magazine plusminus, all dismissed the idea. Nobody expects the inflation rate in Germany to fall back to two percent on average for the year. So everyone should be prepared for the fact that the ECB will actually start turning interest rates this year.