Frankfurt After the clear minus of the past few months, the savings banks see a stabilization in construction financing. This is one of the results of the Deka-S financial climate for the second quarter, a sentiment index for the current situation in the German economy and on the financial markets from the point of view of the Sparkassen-Finanzgruppe. The S financial climate is based on a quarterly survey of the board members of the German savings banks, which the Handelsblatt publishes regularly.
In the most recent survey, savings bank managers’ assessment of the demand for real estate loans jumped from 34.6 to 69.2 points.
However, Ulrich Kater, chief economist at Dekabank, the securities service provider for the savings banks, warns against too much hope: “This should not be confused with a new boom in housing finance. Rather, the crash is probably over and it is a first improvement in real estate financing at a low level.”
With the change in monetary policy, interest rates for private real estate loans rose significantly, and as a result the construction financing business, which is important for German financial institutions, collapsed massively.
In April, the loan volume was only 13 billion euros. According to the analysis company Barkow Consulting, this is the weakest April since the start of data collection 20 years ago. In the first quarter of this year, new business slipped by a good 50 percent compared to the previous year.
Interest rate shock is slowly subsiding
“The shock of the sharp rise in interest rates is gradually wearing off, and we’re slowly getting used to it”, says chief economist Kater. The savings banks are also reporting stable to slightly stronger demand for corporate loans. Here the index value improved from 70.8 to 79.8 points compared to the first quarter.
The willingness to lend also rose slightly to 105.8 points. However, the level around 100 points means that the number of improvements and deteriorations is still almost balanced, explains Kater. Overall, the willingness to lend is stable, so that economic activity is not disproportionately hindered by the financing options.
Overall, the savings banks see a stabilization in the financial sector after the rapid interest rate hikes. This effect is responsible for the fact that the overall index of the S financial climate rose to 85.0 points from 77.3 in the first quarter.
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In contrast to the financing conditions, the economic climate clouded over and fell from 106.4 to 89.9 points. “The general relief that Germany has survived the energy crisis is giving way to the sober realization that there is probably not much left for the German economy this year,” says Kater. The savings banks would not yet see a new upswing in Germany.
Other mood indicators have also recently shown a clear downturn. The business climate of the Munich Ifo Institute fell surprisingly sharply in June to 88.5 points from 91.5 points in the previous month and thus for the second time in a row.
The German economy shrank at the end of 2022 and beginning of 2023 compared to the previous quarter. According to a rule of thumb of experts, it is therefore in a technical recession. The head of the so-called economic experts, Monika Schnitzer, is largely assuming stagnation for the current year.
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