The mortgage rate is the interest rate charged for the use of a mortgage loan. Rates can be fixed, constant or variable. Among the many factors that determine the time of purchase, a lot of buyers are guided by the amount of the current interest rate. The interest rate shows how expensive the mortgage will be for someone. The lower the interest rate, the lower the cost of the loan. If you are thinking about buying a property in Germany with a mortgage, then it makes sense to study the dynamics of rates and make a forecast for 2018 before searching directly for an object.

Dynamics of Mortgage Interest Rates

Today in Germany most buyers of the property choose a loan with a fixed interest rate, for a period of 10 years. Let’s take a look at recent history to understand how mortgage rates have evolved.

From October 2016 till December of the same year it grows from 0,69% to 1,01 %. In January 2017 the mortgage rate reached 1.00 % and continued its rising until September 2017 (to 1,11 %). Then it fell by 0.99% in October and November and has gone up to 1,11% in December. The mortgage rage continued its growth from January 2018 (1,15%) and now it has stabilized at 1,19%. Thus, by November 2016, interest rates had risen from 0.69% to 0.81%. In 2017, there was a small uptrend. For most of 2017, rates were set between 1.0% and 1.2%.

Influencing factors in 2018

The overall market situation is the most important factor in determining the mortgage rate. In 2018, the European Central Bank, the key interest rate, and the US Federal Reserve will influence the real estate market in Germany and throughout Europe. In each aspect, there has been a long upward trend.

Since the German economy remains one of the most stable in the European Union, the demand for national government bonds is currently very high. This keeps mortgage interest rates low, which in turn leads to lower mortgage rates across the country. Interest rates are likely to rise moderately by 0.5% points in 2018. This could lead to an increase in interest rates to 1.5% in 2018. Even as rates rise in 2018, mortgage financing for the purchase of reality is still a competitive tool for as for local citizens as for foreigners.

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