Again, real estate will play a decisive role in the financial market in 2020. The reason for this are the continuing low building rates. With an interest rate of less than one percent, even the record low of last year has been undercut. These favourable conditions for home buyers will further increase the demand for housing this year.
Since the beginning of 2020, several construction loans have been offering real estate loans with an interest rate of less than one percent with a ten-year commitment. Building rates are thus about 0.5 percent cheaper than last year. Even if interest rates showed a slight upward trend at the end of 2019, home buyers will hardly have to expect rising interest rates in 2020. The main reasons for this are the general economic slowdown, the low inflation, the loose monetary policy and political and economic uncertainties. However, experts do not expect interest rates to fall further. The general consensus is that interest rates will continue to move sideways. It is currently still uncertain, though, in how far political and economic factors in Germany, Europe and worldwide will influence the German real estate market.
Cheap real estate loans drive prices up
In addition to wealthy private investors who invest their assets in real estate, the cheap real estate loans also open up the market to less traditional real estate investors, such as single people. The seven top cities, in particular, can no longer meet the increasing demand for residential property. Rising prices for building materials and services are also driving up apartment prices. Home buyers should consider these circumstances before buying a property. Interested parties who have been considering real estate funding for a longer period could certainly benefit from the current interest rate environment.