Urbyo Talks

What is the current situation in the interest rate market? Is it still worth investing in real estate, and if so, what should you look out for when financing? Vivien asked our mortgage expert Janina, Head of Mortgage at Urbyo and owner of over 300 units, these questions today. You can read her answers here.  

Hey Janina. There's been quite a bit of movement in the interest rate market over the past two years, which, among other things, has caused real estate prices to rise quite a bit. Is it even worth buying real estate at these prices? Do you think the prices will eventually fall again?  

Hey Vivien! Currently, there are two camps in the real estate market: Team Buy and Team Wait. I am clearly on the buying team, as are many colleagues. Why? I believe the probability that purchase prices will fall again is relatively low. It may have been the case briefly when ECB interest rates increased so much, but that has since calmed down again. I think it's very likely that prices will continue to rise in the future.  

You just mentioned ECB interest rates. The last increase by the ECB took place about two months ago. What impact did that have on the financial market and interest regarding loans? 

Many non-experts don't know that banks already factor in such risks as an ECB increase. Most banks even expected higher increases than actually happened.

Exciting! How do you see interest rates developing over the next few months?  

I can't give a guarantee, of course. However, my feeling and experience tell me that we will see a considerable drop in interest rates in the summer but that they will rise again in the fall and perhaps slowly fall again. An important indicator here is the inflation issue, which will go down again. We can already see this in gas prices, for example. They are now almost at the level they were two years ago. In short, I think we will see some more ups and downs soon and end up with 100% financing for 2.5% in the long term.  

I've been hearing more and more lately that home savings contracts are on the rise again. What's your opinion on that?  

I don't think you can give a blanket answer to that. I find home savings contracts quite interesting as an additional option for financing, e.g., as "health insurance," to have reserves for modernization or renovation. I have many customers who approach me with the desire to secure the currently relatively low interest rates on a home savings contract for follow-up financing. What I always do then is to calculate the whole thing in detail. A building savings contract can make sense, but it is often not. Ultimately, it also often depends on how risk- or security-oriented the customer is.  

Are there other financing or subsidy programs that you find exciting?  

Honestly, I'm not very convinced by the KfW funding programs. As we saw two years ago, these programs can close down overnight because the funds are empty. That's why my customers often do without them. On the other hand, I find the subsidies of the individual countries quite interesting. If you're interested, it's best to talk to your financing agent about this.  

Good advice! Let's get to the last question: Do you have any other tips for buying a property soon?  

Do not hesitate; take action! Currently, I observe that many people are uncertain and prefer to wait things out. But as I said, prices will, in all likelihood, rise again soon. So if anyone out there would like to clarify open questions or needs support with the real estate search or the financing of it, feel free to contact us.  

There's nothing more to add. Thanks for your time and responses, Janina!