Why banks are turning down a large number of real estate loans for mortgage financing

house building

Financing based on small surpluses “is no longer easily waved through.”

(Photo: Mauritius images / Ralf Gerard)

Frankfurt The number of newly granted home loans is lower than it has been for many years. This is confirmed by banks and intermediaries. However, this is not due to a lack of demand, as a study by Barkow Consulting now confirms. In fact, according to the credit agency Schufa, the demand for mortgage lending has picked up again recently.

In January 2023, for example, banks had their credit ratings checked by the Schufa ten percent more often than in January 2022. “However, the number of new mortgages is falling dramatically, and many loan applications are increasingly unsuccessful,” comments Peter Barkow, founder of the management consultancy, on the data.

Experts from FMH-Finanzberatung are not surprised by the high rejection rate. Because real estate is currently declining in value, banks are making fewer loans. Because if a creditor can no longer pay his loan, the property has to be sold again. The bank must not make any losses if possible, otherwise it could get into problems itself.

Construction financing: Banks require more equity for real estate purchases

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