Interest turnaround slows housing prices

 

Low interest rates, skyrocketing prices: Housing and house building were recently considered an ideal investment. But now there are signs that real estate prices will finally lose momentum. Due to a possible turnaround in interest rates, borrowed capital becomes more expensive, which pushes prices on the housing market.

The upward trend in real estate prices seems to have stopped. According to the marketplace platform “Europace” recently only new-build houses have gained in value . Overall, the house price index of the financial marketplace with a plus of 0.31 percent, although slightly increased, but it turns out a turnaround. The price of condominiums dropped for the first time in May – by 0.13 percent. The index for existing detached and semi-detached houses is stagnating.

Interest turnaround makes mortgage lending more expensive

 Interest turnaround makes mortgage lending more expensive

As the “world” reports, the Europace-Index has already been declining more frequently in the past. But this time around , stopping the price hike coincides with a potential turnaround in interest rates , making experts sit up and take notice . Interest rates on mortgages have risen by up to 0.7 percent in recent weeks. Since private individuals finance their home construction or real estate purchases with debt capital by up to 80 percent , rising interest rates mean that they can spend less on the property itself.

Explosion of housing prices is stopped

 Explosion of housing prices is stopped

The forecast for the further development of real estate prices is therefore reserved. “After the significant increase in the first two weeks of May, interest rates on mortgage lending moved sideways in the second half of the month. But that was enough to keep the price rise in real estate down again, “Europace CEO Thilo Wiegand is quoted in a press release from the marketplace platform, saying that there has not yet been a real drop in prices. According to experts, experts of the International Monetary Fund expect the turnaround in interest rates to skyrocket in 2017. However, rising interest rates in the US could hit the European capital market sooner.

| shutterstock.com

Current financial news

infographics Infographic: The dream of a home

Infographic: The dream of a home

counselor Rollover: Term extension for loans and investments

Rollover: Term extension for loans and investments