In a comprehensive study, Interhyp analyzed the change in mortgage lending over the past ten years. Security in particular, but also flexibility, are playing an increasingly important role in property purchases.
For the study by Interhyp, Germany’s largest broker for mortgage lending, over 600,000 financings were evaluated between 2010 and the end of June 2020. According to the board member for private customer business, Mirjam Mohr, Interhyp noticed during the consultations that property buyers and builders place greater emphasis on security in their financing.
Repayment rates rise
The recently published study also shows that initial repayment rates have increased. This is partly due to the higher real estate prices. Accordingly, the initial repayment for builders and buyers has risen from 2.6 percent in 2010 to 3.3 percent. Flexible adjustment of the repayment installments is also increasingly in demand in order to be able to adjust the installments up or down in the event of a loss of income or a higher income. According to Interhyp, the COVID-19 crisis has reinforced the desire for security and flexibility.
Significantly more equity
In addition, Interhyp observed that, despite the historically low interest rates, significantly more equity is now being contributed. In 2010 it was still an average of 83,000 euros, in 2019 the value was over 100,000 euros. In the first half of this year, an average of 110,000 euros equity was contributed to the mortgage loan. For Interhyp, this is a further indication of the higher priority given to security in mortgage lending.
Real estate remains popular as an investment
According to Interhyp, the persistently low interest rates for property buyers have made property even more attractive as an investment. In 2010, ten-year loans were still due 4 percent interest per year, today it is usually less than one percent. According to Interhyp, the proportion of investors who finance a rented property has risen from twelve percent in 2010 to 25 percent. For three quarters of Interhyps mortgage lending customers, however, the desire to live in the property themselves is still the decisive factor in buying or building a property. Here, however, prices have risen considerably. While in 2010 the financing considered by Interhyp, including ancillary costs, was around 277,000 euros on average, in the first half of 2020 it was around 434,000 euros.
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