High costs slow down the construction financing business

Frankfurt For German banks, construction financing has been one of the most important sources of income in the private customer segment for years. However, due to high inflation and rising loan interest rates for the purchase or construction of real estate, this important business is now deteriorating noticeably.

In December, customers would have taken out ten-year mortgage lending at an interest rate of less than one percent, now they are paying three percent or more, said Philipp Gossow, who heads sales in Deutsche Bank’s private customer business, on Tuesday at the Handelsblatt conference “Future Retail Banking”. in Frankfurt. “That changed incredibly quickly in three months.”

The result: many customers hesitate to buy real estate. There is clearly “a slowdown” in construction financing, said Thomas Schaufler, Commerzbank board member for private customers. In addition to the higher interest rates on loans, the fact that the current household costs of potential property buyers have risen due to inflation also plays a role. Many customers therefore asked themselves: “Is that still possible?”