Real estate financing is a crucial aspect of buying a house or apartment, and with recent stock market volatility, the U.S. election, and uncertainty surrounding major central banks, predicting interest rate developments has become increasingly complex. Max Herbst, CEO of FMH Financial Consulting, attempts to shed some light on the current situation.
One of the key factors influencing real estate financing is the development of property prices. With demand for good properties on the rise and supply still limited, prices are seeing a slight increase. This trend poses challenges for potential buyers, as they may need to act quickly to secure a property at a reasonable price.
When it comes to mortgage conditions, predicting their development is much more challenging. While the European Central Bank’s interest rate cut has raised hopes of cheaper mortgage rates, this is not always the case. Banks primarily fund mortgages with a mix of long, medium, and short-term capital market funds, which are not directly impacted by the ECB’s decisions.
The yields of German government bonds and covered bonds play a significant role in determining mortgage rates. The recent fall in yields may not be sustained, as long-term investors are also concerned about rising inflation expectations. Changes in investment behavior can put pressure on yields, affecting mortgage rates in the process.
Inflation, stock market uncertainty, and central bank policies are all factors that could influence the development of mortgage interest rates in the coming months. The outcome of the U.S. elections and global political situation will also play a role in shaping investor sentiment and market conditions.
Max Herbst predicts that there will not be any dramatic fluctuations in mortgage interest rates, with a possible swing of 0.25 percentage points up or down. The ECB and Fed’s rate cuts are expected to have a limited impact on inflation and mortgage rates. The uncertain political climate may drive investors towards safe investments like German government bonds, keeping yields low.
In conclusion, the complexities of predicting interest rate developments highlight the need for a coordinated approach between the Federal government and central banks to ensure stability in the financial market. By implementing policies that foster economic growth and consumer confidence, the government can play a crucial role in shaping mortgage conditions for potential buyers.