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Construction financing: Conditions for property buyers are becoming increasingly difficult

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aFaced with rising lending rates and expensive materials, homebuyers and builders need to bring more cash with them. In 2021, owners-occupiers contributed an average of €111,000 of their own money to build or buy a property, but the amount has risen by a good quarter to nearly €140,000 last year, according to new figures from mortgage broker Hüttig & Rompf. Watch. In the last quarter of 2022, real estate brokered by the company amounted to approximately 149 thousand euros.

According to Hüttig & Rompf, the share of equity in the total costs of builders and buyers, which averaged €562,000, rose from 20 percent in 2021 to nearly 25 percent last year. In the last quarter of 2022 it was already 28 percent. “This is necessary in order to obtain financing from banks, which in recent months have significantly increased their requirements, promising reasonable terms.”

The interest on construction for ten-year financing has more than tripled in a year from about one percent to about 3.5 percent recently. At the same time, real estate prices only slowly fall from a high level, while construction prices continue to rise rapidly. Many people can no longer afford the dream of owning their own property or would rather retreat. New business has been dropping in mortgage lending since last summer.

Debtors are paying off slower

According to Hüttig & Rompf, the increased costs are reflected in the credit burden. In 2021, the gross monthly rate for resident owners averaged €1,447 for brokered loans, and in 2022 it rose sharply to €1,717. Debtors have been forced to repay more slowly: The repayment rate for newly concluded construction loans to resident owners was 2.8 percent in 2021, it fell to 2.4 percent in 2022 and to 2.2 percent in the most recent quarter.

Although this eases the monthly burden, debtors often repay their loans for longer years. Mortgage broker d. According to Klein, the average payback in November has already fallen to its lowest level since 2012. This can be explosive for debtors: Experts advise paying off mortgages well before retirement. As a rule, a maximum of one-third of the family’s income should be allocated to the loan.

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