Despite the same interest rate: monthly costs for property buyers lower than three years ago

An analysis by the property portal immowelt of changes in the monthly annuity payment (10-year fixed interest rate) when buying an existing 75-square-metre flat shows:

• Mortgage rates are currently at the same level as three years ago, but flat prices have since fallen in many places
• Monthly annuity payments for flat purchases are now lower than in October 2022 in 49 of Germany’s 80 major cities
• Largest monthly savings in Munich (-209 euros), Stuttgart (-187 euros) and Frankfurt (-150 euros)
• Higher costs in 30 cities, by contrast: Bonn (+84 euros), Darmstadt (+77 euros) and Koblenz (+63 euros) have the largest increases in monthly payments

Interest rates for property finance are currently at the same level as three years ago. Anyone taking out a property loan must presently expect an average interest rate of around 3.65 per cent with a ten-year fixed-rate period, exactly the same as in October 2022. Nevertheless, buyers’ monthly costs are often lower today than they were then. The reason is that asking prices for residential property have fallen in many places. Loan repayments are therefore lower in 49 of Germany’s 80 major cities; at the upper end, buyers currently pay around 200 euros less per month than in October 2022. This is shown by a recent immowelt analysis comparing the monthly annuity payments when buying an existing 75-square-metre flat in Germany’s major cities on 1 October 2022 and 1 October 2025. The calculation assumed 20 per cent equity, excluding ancillary purchase costs, and repayment over a period of 30 years.

“Anyone financing a property today benefits from lower monthly costs than three years ago in most major cities,” says immowelt Managing Director Dr Robert Wagner. “Prospective buyers should not wait too long, however: asking prices for residential property have been rising again for some time, and a significant fall in mortgage rates is not currently expected. The terms for property buyers, which are often more favourable than at the end of 2022, could therefore soon be a thing of the past.”

Noticeable relief in major cities

In October 2022, the property market’s cooling was already well under way. Shortly beforehand, the rapid rise in interest rates had ushered in an extended period of noticeable price falls. Asking prices for existing flats in many places are still below their level at that time, reducing buyers’ monthly loan repayments in many cities. In the most populous major cities, the falls in monthly payments are sometimes particularly pronounced. The largest savings are in Munich, where prices for owner-occupied flats have fallen noticeably compared with October 2022. Three years ago, an existing 75-square-metre flat was still offered for an average of 671,000 euros; the current figure is 614,000 euros. With an interest rate of 3.65 per cent both then and now, the cost of the property loan has consequently fallen by 209 euros per month, from 2,456 euros in October 2022 to 2,247 euros now.

Lower property prices have also reduced monthly loan repayments in other major cities. Someone financing an owner-occupied flat in Stuttgart today pays 187 euros less than three years ago, while the saving in Frankfurt is 150 euros. Relief is somewhat smaller in Hamburg and Berlin: the monthly payment for an existing 75-square-metre flat fell by 80 euros in the Hanseatic city and by 70 euros in the capital.

Monthly savings of up to 121 euros in smaller major cities

Prospective buyers benefit from lower purchase prices and consequently lower annuity payments not only in the largest cities, but also in several smaller major cities. The decline is particularly pronounced in Ingolstadt, where the monthly payment to finance a 75-square-metre flat has fallen by 121 euros compared with 2022. Property-finance costs have also fallen noticeably in Freiburg, where buyers now pay 113 euros less per month in principal and interest than three years ago. The relief is somewhat smaller in Augsburg (-84 euros), Fürth (-77 euros), Würzburg and Wolfsburg (-74 euros each).

Higher costs in 30 cities

Although the monthly annuity remains lower than three years ago in many German major cities, this advantage is increasingly disappearing. Property prices are rising again and drawing ever closer to their 2022 level in numerous cities. In 30 of the 80 major cities, asking prices for existing flats are now already above their earlier level, resulting in higher monthly property-finance costs as well. In October 2022, an existing 75-square-metre flat in Bonn cost 294,000 euros; buyers now pay an average of 317,000 euros. At an interest rate of 3.65 per cent, this produces a monthly annuity payment of 1,160 euros, 84 euros more than three years ago.

Darmstadt records the second-largest additional burden, with monthly payments 77 euros higher. Costs have also risen by more than 50 euros in Koblenz (+63 euros), Jena and Halle (Saale) (+59 euros each).