What is the current interest rate

Current building interest rates 2021: This is how the interest rates for your home loan are

Secure the currently cheapest building interest now!

The building interest is the interest rate at which you borrow a real estate loan. This determines how high the total cost of the loan will be. If you decide to get a home loan now, you can secure it at currently very favorable terms, as a look at our interest rate comparison reveals.

How high are the current building rates?

The current building interest is around 0.4% to 1% APR depending on the loan amount and the duration of the fixed interest rate. The interest rates in the following table are an example calculation and apply to a loan of € 320,000 with a property value of € 450,000. The repayment rate is 2% in all cases. You see the best offer from our building interest calculator.

Current building rates in comparison

Fixed interest rate5 yearsten years15 years20 years
Effective interest rate0,50 %0,66 %0,84 %1,05 %
Debit interest0,49 %0,65 %0,82 %1,03 %

Source :vergleich.de, Construction Financing Comparison (as of May 17, 2021)

Building interest chart: an overview of the development of building interest

Since 2008, the development of building interest rates - originally as a reaction to the global banking and financial crisis - has been on a downward trend. This has advantages and disadvantages for your home loan or your follow-up financing.

  • Advantage: Real estate loans are granted at very low interest rates and are therefore relatively cheap.
  • Disadvantage: There is a great demand for real estate and the prices of land, houses and apartments are rising as a result.

Our building interest chart shows you the development of the building interest rate over the past 10 years. You can choose up to three fixed interest rates, the building interest rates for which are displayed in the line chart at the same time. For example for 10, 15 and 20 years.

How will building interest develop in the future?

The question of future interest rate developments is difficult to answer. Many experts assume that there will be no change to higher building interest rates until autumn 2021 or even 2022 at the earliest. To do this, the European Central Bank would have to give up its low interest rate policy, which requires positive economic development in Europe. However, this is currently not foreseeable. Therefore, building interest rates are likely to remain low for a few more months.

Why are construction rates currently historically low?

Building interest rates have been at a very low level for years. One of the main reasons for low building interest rates is the interest rate level for Pfandbriefe. Banks use these bonds to finance their construction loans. The lower the interest on Pfandbriefe, the less banks have to pay for the money - they pass these low costs on to their customers with low building interest rates.

The interest rates for Pfandbriefe are set by the Deutsche Girozentrale in Frankfurt, which in turn is based on the interest rates for German government bonds with a 10-year term, which are also very low due to the strong demand.

Another reason for low mortgage lending rates is the monetary policy of the European Central Bank (ECB), which uses the key interest rate to determine the conditions under which banks can lend money to one another. In order to stimulate the economy in Europe, the ECB is pursuing a low interest rate policy. Therefore, banks get money on favorable terms.

Danger: Because of the prolonged phase of low interest rates, even the possibility of negative building interest rates is being discussed. In this case, you would have to pay back less money than you would have to borrow for a construction loan. However, it is not clear whether and when there will really be negative building interest.

How do I find a cheap interest rate?

The best way to find the right mortgage is by comparing interest rates from different providers. Since real estate financing usually involves sums in the six-digit range, even a few percent interest differences can make up several thousand euros. It is therefore important that you keep an eye on current mortgage rates and interest rate developments when you are looking for a cheap loan. Because the better you know the market and the interest rate level, the better you can plan your mortgage lending and go into a financing meeting with the bank.

Tip: When comparing interest rates, differentiate between debit interest and effective interest. The effective interest rate is the interest rate including all incidental costs such as acquisition fees. But beware! At the beginning of 2019, the Bremen consumer center found that the composition of the effective interest rate could not be traced in around 20% of the loan offers. Different terms were also used for individual cost items. A comparison of the interest costs actually incurred and the debit interest is useful for an initial overview.

What influences the level of my building interest?

There are several factors that influence the amount of building interest in a specific case and thus ensure more or less loan costs. Therefore, the interest rates differ depending on the individual requirements of the borrower. In the following we describe the seven most important cornerstones that will change your building interest.

1. Longer fixed interest rates lead to higher building interest rates

Banks offer different fixed interest periods, usually between 5 and 20 years. The longer you are tied to an interest rate, the higher it will be. When answering the question of how long should I lock building interest rates, you need to weigh up the following factors: security and flexibility.

  • Security in that you can lock in a currently low interest rate for mortgage lending for a long period of time.
  • Flexibility, as you could benefit from cheaper follow-up financing once a shorter fixed interest rate has expired.

2. Better creditworthiness means better interest rates

The bank will always check your creditworthiness, i.e. your creditworthiness. As a rule, she gets information from SCHUFA for this. The higher your creditworthiness is rated by the SCHUFA score, the cheaper the mortgage interest rates that the bank offers you. Personal key data such as occupation and salary also affect the amount of building interest. Civil servants, for example, receive better conditions than the self-employed. Your place of residence can also have an impact on mortgage rates due to regional offers.

3. High repayment installments reduce the term, but can increase the building interest

The repayment installment describes the percentage of the home loan that you repay in monthly installments. Often the borrower chooses a repayment rate of 2% or 3%. In general, the following rule applies: the higher the repayment rate, the faster the loan is paid off. The following graphic shows how the total term of a home loan is already reduced when the repayment rate is increased from 1 to 2%.

You can use our repayment calculator to determine how the total term of your real estate financing changes with different repayment installments.

With follow-up financing, a high repayment rate has the advantage that the remaining debt is lower. However, this increases the monthly installment payments.

Good to know! Given the current low building interest rates, an initial repayment of more than 2% should be used. Make sure you have enough financial buffer for unexpected costs or repairs during the repayment. If you want more flexibility for your repayment rate, we recommend real estate financing with a free repayment rate change. With this variant, you can adjust the agreed repayment rate during the term if, for example, your financial circumstances change.

4. Lots of equity capital lowers interest rates

The amount of available equity has a direct impact on the building interest that is offered to you. The more equity there is, the less risk a bank takes in lending. Banks reward this risk minimization through equity capital with lower borrowing interest on the construction loan. For example, if you buy a house for € 400,000, you get the best interest rate for your real estate financing with 40 to 70% equity. Anything beyond that worsens the interest rate again.

5. High loan amount often makes loans more expensive

The higher the loan amount, the more money the bank will have to lend you. This also increases the bank's risk that the loan cannot be repaid. Banks can often pay for this higher risk with higher interest rates.

6. Low mortgage lending value means higher interest rates

The mortgage lending value indicates what value the property could have in the event of a possible foreclosure sale or foreclosure if you as the borrower cannot repay the home loan at some point. This is usually around 70 to 90% of the purchase price or the construction costs. This value limits the amount of the loan and influences the loan interest. In most cases, a lower mortgage lending value results in higher interest rates.

7. Use and location of the property influence the building interest

Lenders also take into account the planned use of the property when determining the interest rate: banks generally see a higher credit risk in properties that are to be used as capital investments. Therefore, interest rates for property used by third parties are often higher. In addition, the property situation plays a role in setting the building interest. If the house or condo is in an area of ​​low demand, banks often charge higher interest rates on a home loan.

Tip: A forward loan ensures low building interest rates for follow-up financing. If the current interest rates for mortgage lending are at a low level, there is an option to secure them in advance. With the so-called forward loan, you can reserve a low interest rate for follow-up financing up to a maximum of 5 years before the fixed interest period expires.

Benefit from currently low building interest rates when rescheduling

Debt rescheduling is called a change of bank after the fixed interest period has expired. At this point, you can run your follow-up financing through your previous bank or redeem the loan. At the latest 3 to 6 months before the existing fixed interest rate expires, you should obtain alternative offers to the conditions of your previous bank and carry out an interest comparison.

The change is associated with effort, but holds great potential for savings - especially when the current building interest rates are low. By the way: If your fixed interest rate is longer than 10 years, you still have the option of changing providers thanks to the special right of termination under Section 489 of the German Civil Code. This enables you to terminate your existing mortgage loan without having to pay an early repayment penalty.

If you receive Baukindergeld and want to use the annual payments as a special repayment, you can repay your construction loan more quickly. However, the option of free special repayments often increases interest rates. Let your bank calculate whether the savings from the possible special repayment are greater than the higher interest rates on the mortgage lending.