Innsbruck/Vienna (OTS) – The sustained increase in inflation is increasingly bringing more and more households to their breaking point. The affordability of residential real estate has already fallen sharply due to the increased cost of living. Added to this is the significant rise in interest rates, which is making home construction loans more expensive. The ECB raised its main refinancing rate to 2.50% by December 15, 2022 – to a level last seen in 2009. The 3-month Euribor rose from 09/30/22 to 01/02/23 by 98.9 basis points (1 basis point is one hundredth of a percentage point) to 2.162%. At the same time, the 12 banks in the IKI market sample increased their margins, which meant that loans with variable interest rates increased by 105.4 basis points to an average of 3.389% over the quarter.
Variable lending rates increased sharply
A review of the year shows how borrowers with variable interest loans were specifically affected: Since the beginning of 2022, the effective rate for an average variable interest home construction loan of EUR 100,000 with a 25-year term for good credit ratings has increased from EUR 369.05 per month to EUR 511.23 , i.e. increased by 142.18 euros or annually by 1,706.16 euros. Assuming that 300,000 euros were still outstanding over 25 years, the annualized debt service would have become more expensive by 5,118.48 euros. The underlying nominal interest rates rose from 0.586% to 3.389% in the past year, i.e. by around 2.803 percentage points.
During the same period, the average rise in interest rates for 10-year fixed-interest loans was even greater, with the nominal increase in price from 1.168 to 4.023% or by 2.855 percentage points. For the effective rate, which also takes ancillary costs into account, this means a monthly increase from EUR 397.28 to EUR 546.75 for a loan of EUR 100,000, i.e. by EUR 149.47 or EUR 1,793.64 annually.
Fewer fixed interest loans and halving of the housing loan market
Anyone who still gets a housing loan after the introduction of the stricter lending standards (KIM-V) since August 1, 2022 has to dig deeper into their pockets and also has a smaller selection of offers: Because banks are reducing their range of fixed-interest loans, some of them drastically. This is due in particular to the fact that banks no longer want to assume the interest rate risks, some of which are long-term, or the costs for the necessary refinancing and risk provisioning are too high.
These parameters lead to a sharp decline in the granting of housing loans. From August 2022, the slump in new housing construction loans compared to the same months of the previous year ranged between 30.6% (September) and 47% (November). With increasing interest rates, new financing activity has almost halved by November 2022.
Real estate prices are crumbling
According to the residential property price index published by the OeNB, the domestic residential real estate market reached its peak (at least for the time being) in the third quarter of 2022. In the fourth quarter there was already a decline of 1.9% to 272.9 points. While the annual price increase was still 13.1% in the second quarter, it slowed down to 10.8% in the third quarter before the price dynamic slowed down to 5.2% in the fourth quarter. It is also noticeable that new apartments have recently performed significantly better than existing apartments. In the case of older properties, future energy-related refurbishment measures and investment costs may already be factored in. ESG is also becoming increasingly important in the domestic real estate market.
Bright spots and Infina credit initiative for young and old
The market for residential real estate and housing loans is in a phase of change. Especially in the current credit market environment, young families and older borrowers are increasingly being left behind. Politicians have already recognized this. Therefore, a slight improvement in the framework conditions can be expected in the next few months, initially from this side.
And – the Infina credit initiative for young and old offers both younger borrowers and seniors tailor-made financing offers as a result of access to over 120 credit institutions in Germany and abroad, using artificial intelligence in the selection of offers. The products of the loan platform of the association of the leading housing finance experts in Austria are constantly updated and thus contain the right financing solutions at the present time.
Infina’s housing finance experts are always at your disposal for further information and inquiries.
About Infina
Infina is an independent, Austria-wide consulting company and operator of the leading omnichannel platform for real estate financing Profin. Customers and partners benefit from the size of Infina on the market and the claim to find the right financing for every customer.
The credit platform developed in-house is already used by more than 500 sales partners who have access to over 430 credit products from Austrian and German banks. With its own sales organization, Infina is represented as a housing finance expert more than 100 times on site throughout Austria. Founded in 2001, the company currently successfully arranges financing for over 120 banks and building societies.
Infina actively contributes to technological change by digitizing the processes in Profin and offers the most modern form of network cooperation for partners. With the introduction of the end-to-end process, all parties involved in a transaction were involved. Infina thus offers an integrated business model that digitally connects experts for services related to the purchase of real estate. With a new business volume of more than 1.6 billion euros in 2021, Infina is the market leader in the free and digital brokerage of private real estate financing.
Questions & contact:
INFINA Credit Broker GmbH
Hagen Luckert
hagen.lucker@infina.at
www.infina.at
