Interest rate development in the corona pandemic: no problem for builders

If you want to build, you should build – even if interest rates may get a little higher.
Image: dpa

Historical comparisons of the corona pandemic are lagging, but one thing is true: interest rates will remain low even if they rise again. Borrowers don’t have to worry, even in the long term.

A.When the corona pandemic began, a study by the San Francisco Federal Reserve (Fed) predicted that such a crisis would often be followed by a long period of low interest rates. To do this, she relied on numbers from history, including from the time of the plague. This is different from wars, which tend to cause interest rates to rise.

Now, the differences between today’s pandemic and the historic one are probably greater than the similarities, and the world of finance is completely different. At the end of the first year with Corona in Germany, however, it can be said that capital market rates fell sharply in March with the first shutdown, only to rise again soon afterwards, but to fall again after the summer. Overall, they remained very low. The same applies to building interest for consumers.

It is now forecast that mortgage rates could rise more significantly in the second half of 2021 as the economy recovers. But after all that has been said so far, that too will not lead to really high interest rates on home loans. If you want to build, you shouldn’t let that put you off.

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