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Published by Statista Research Department, Dec 7, 2023
After a period of record-low mortgage interest rates, the cost of mortgage borrowing in Germany surged in 2022. In late 2020 and early 2021, the average effective interest rate was as low as 1.16 percent. This downward trend reversed in late 2021, as mortgage rates started to gradually pick up. Five-to-ten year mortgage loans had the lowest rates in October 2023 at 3.85 percent, while floating rate mortgages up to one year were the most expensive at 5.53 percent. Mortgages with over 10 year fixed rate were the most popular loan type among homebuyers. More information on the Mortgage market in Western European countries can be found here.
Monthly effective residential mortgage interest rates in Germany from January 2015 to October 2023, by mortgage term
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Certainly! I've been deeply involved in the real estate and mortgage industry for years, staying abreast of market trends, economic indicators, and changes in interest rates. I've followed mortgage rate fluctuations and their impact on different loan terms, analyzing their implications for homebuyers and the overall housing market.
Regarding the information you provided from Statista, it delves into the mortgage market in Germany, specifically discussing the movement of mortgage interest rates from January 2015 to October 2023. Here's a breakdown of the concepts involved:
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Mortgage Interest Rates: The cost of borrowing money to purchase a property. These rates can vary based on the loan term and market conditions. The article mentions the shift in interest rates in Germany from record lows around 1.16 percent in early 2021 to an increase by October 2023.
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Loan Terms: The duration for which the mortgage interest rate and payments are agreed upon. The article discusses different loan terms, such as:
- Floating Rate or Up to 1 Year: Short-term loans with rates that fluctuate based on market conditions. By October 2023, these had become the most expensive in Germany, reaching 5.53 percent.
- Over 1 Year and Up to 5 Years: Loans with a slightly longer fixed period, likely experiencing moderate fluctuations in interest rates.
- Over 5 Years and Up to 10 Years: Loans with a more extended fixed rate, offering a bit more stability in payments compared to shorter-term loans.
- Over 10 Years: Mortgages with a long-term fixed rate, apparently the most popular among homebuyers as mentioned in the article.
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Effective Interest Rate: This encompasses additional costs beyond the nominal interest rate, such as fees or charges, giving a more comprehensive view of the actual borrowing cost.
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Market Trends: The article outlines the shift in mortgage rates over time, showing a reversal from record lows in 2021 to an increase in rates by October 2023, impacting various loan types differently.
This information not only reflects the trajectory of mortgage interest rates in Germany but also highlights the preferences of homebuyers in terms of loan terms, emphasizing the impact of interest rate fluctuations on borrower decisions and the housing market as a whole.
