FRANKFURT (dpa-AFX) - Rising interest rates are causing homebuyers and builders to shy away from taking out new loans. While consumers took out significantly more mortgage loans at the beginning of 2025, the recovery has since tapered off. This is shown by figures from the analysis firm Barkow Consulting, based on data from the European Central Bank (ECB).

According to the report, German banks issued new loans totaling 59.2 billion euros to private households and the self-employed in the fourth quarter of 2025. This marks the weakest quarter of the past year. The slowdown, which had already become apparent in the spring, has continued, and new business has stagnated for the third consecutive quarter, wrote Managing Director Peter Barkow.

"The Time for Bargain Hunters Is Over"

In his view, consumers are caught in a bind: on the one hand, mortgage rates have risen. By the end of 2025, average rates for ten-year loans had reached 3.9 percent, the highest level in more than two years. At the same time, property prices remain stable or are even rising slightly. "The time for bargain hunters in the housing market is over."

Frankfurt-based FMH Financial Consulting currently sees mortgage rates ranging between 3.75 and 4 percent—in the summer of 2025, they were at 3.6 percent. Since homebuyers and builders often borrow hundreds of thousands of euros, even small rate movements become expensive. At present, no major changes are expected, wrote FMH expert Max Herbst.

The market for new private mortgage loans boomed until spring 2022, but a sharp rise in interest rates following Russia's invasion of Ukraine put an end to the surge. With construction costs also rising sharply, many people abandoned their plans to build or buy real estate. The market subsequently recovered. This also helped new mortgage lending: thanks to a strong start to the year, new business grew by just over a fifth in 2025 compared to the previous year, reaching 241 billion euros, according to Barkow Consulting. However, previous record highs remain out of reach.

While ECB key interest rates remain at a moderate level, the prospect of billions in federal debt has pushed up capital market rates, which in turn affects rates for private homebuilders and large investors. According to many experts, a new real estate boom like the one seen through 2022 is therefore not expected./als/DP/mis