German borrowers are facing higher fixed-rate mortgage offers as Interhyp’s benchmark reached 4.42% on Oct. 15, while official data show home prices still rising despite costlier financing.
Interhyp, a German mortgage broker, put its benchmark for loans with a 10-year fixed period at 4.42% on Oct. 15. In the broker’s April 2 update, the comparable figure was about 3.9%. Interhyp links the increase to uncertainty over the Iran conflict and rising bond yields.
The broker says yields on government bonds and mortgage-backed Pfandbriefe provide a closer guide to long-term mortgage pricing than the European Central Bank’s (ECB) policy rate. Interhyp’s mortgage benchmark and the ECB’s short-term rate therefore measure different parts of borrowing conditions.
Deutsche Bundesbank data show an annual effective rate of 4.01% on new housing loans in August, compared with 3.93% in May. Those figures reflect completed bank business, while Interhyp’s October benchmark tracks mortgage offers. The two rates cover different periods and measures.
Germany’s Federal Statistical Office (Destatis) reported that consumer prices were 3.3% higher in September than a year earlier, with energy prices up 14.9%. The ECB raised its deposit rate by 25 basis points to 2.50%, effective Sept. 16, citing inflation risks linked to the conflict in the Middle East.
Residential property prices rose 0.6% year over year in the second quarter and 0.3% from the first quarter, Destatis reported. ING analysts Carsten Brzeski and Franziska Biehl said limited housing supply has supported prices even as higher financing costs weigh on buyer demand.
Interhyp said its lender panel generally expects little movement in mortgage rates over the next one to two months, while views for the following six to 12 months are divided. The ECB’s next monetary policy meeting concludes Oct. 29.
