How inflation affects construction financing

Ten percent - that's how high the inflation rate has been since October, recording the highest value since 1951. There is no reduction in sight. Since the prime rate has been raised along with inflation, prospective buyers are right to ask: How will inflation affect my construction financing? We explain it to you.

Benefit from fixed loan rates

Not only are the costs of food and energy rising, but real estate prices and interest rates for construction financing are also climbing. But even if it seems otherwise at first glance, inflation can have a positive impact on your real estate purchase. This is the case if you opt for an annuity loan with fixed loan installments. The higher the inflation rate, the more the real interest rate for installment loans falls into negative territory. This devalues credit debt, which theoretically means you pay back less than you were lent. However, this scenario only applies to loans with interest rates lower than the rate of monetary depreciation. In addition, you only benefit during the fixed debit interest period. Subsequently, the interest rate is adjusted according to the current inflation rate.

Loans with variable interest rate

If you would like to fulfill your dream of owning your own home in the near future, you should refrain from taking out loans with variable interest rates. Since banks and lenders can change the interest rate at any time, there is a risk that the financing installment will suddenly be significantly higher than planned in your initial cost calculation.

Secure credit early

With the right strategy, you as an owner will benefit from inflation. This applies not only to the purchase of a house in which you live yourself, but also to the investment in a rented property. Depending on the contract and legal regulations in your region, you may be allowed to adjust the rent to the rate of inflation, which in turn will allow you to easily pay for a higher construction loan. It is important to secure a loan with a long term of at least 15 years early on. This allows you to calculate for the next few years and avoid nasty surprises.

You are still unsure which construction financing is the right one? We maintain an extensive partner network and will be happy to put you in touch with a qualified financing expert who can provide you with comprehensive advice. Please feel free to contact us for further information.

Related articles

Real estate purchase

Common mistakes when buying real estate

You want to buy an apartment or a house in Hamburg? There are many things to consider. Whether as a residential property or as an investment, we explain how to avoid the most common mistakes when buying real estate.

Read more  
Real estate purchase

Is the investment of a vacation property worth it?

Who does not dream of their own four walls in a paradisiacal place? Never again fully booked hotels, instead sun, sea and relaxation as often as you like. The advantages are obvious: you can design the property exactly according to your own ideas, you are not dependent on seasonal prices and you can go on vacation spontaneously at any time. In addition, you will get to know the local culture in a completely different way than a normal vacation visitor. However, investing in your own property is only financially worthwhile if the purchase is well considered. We explain what you should look out for.

Read more  
Real estate purchase

Special features when buying old buildings

The climate debate has also long since reached the real estate sector. However, energy efficiency and resource conservation are not only an issue for new buildings and are often part of the legal requirements. The same applies to old buildings: Buyers can no longer avoid energy-efficient housekeeping and modernization. But what do homebuyers actually need to pay attention to?

Read more  

Our services for you


You would like to



You would like to



You wish

an evaluation...