Getting a mortgage in Germany has become more expensive than at any point since the 2009 financial crisis, according to Munich-based broker Interhyp. The average rate on a ten-year fixed loan now stands close to 4.5%, surpassing the previous peak of just over 4.4% recorded at the end of 2023.
The rise has been swift: as recently as May, the average ten-year rate was 3.9%, Interhyp CEO Jörg Utecht said in a statement. The broker's latest survey of lenders, published on 15 October, put the average at about 4.4%, but it continues to climb.
Iran war and ECB policy drive costs
Utecht attributed the latest increase primarily to the Iran war and the inflation fears it has stoked. To keep price pressures in check, the European Central Bank has raised its key deposit rate twice this year, bringing it to 2.5%.
For a typical home loan, the recent rise adds nearly €200 to monthly repayments, Utecht said, noting that some customers have become more hesitant. He added that rates would only fall significantly once the conflict is resolved for good, something he saw little sign of so far.
Data from the Bundesbank and the ECB confirm how quickly borrowing costs have swung. The average German mortgage rate jumped from 1.48% in early 2022 to 4.15% at the end of 2023, eased to 3.57% in early 2025, and climbed back to 3.91% in the second quarter of this year before the latest surge.
Housing market defies expectations
Despite the higher financing costs, German house prices continue to edge higher, as Dutch bank ING noted in an analysis last month. The federal statistics office Destatis reported a 0.6% year-on-year price increase in the second quarter of this year, leaving prices more than 5% above their 2024 low but still 8.2% below their 2022 peak.
ING argued that "the chronic lack of housing supply has prevented a more pronounced correction in prices," adding that residential construction "remains subdued." The bank also warned that "a meaningful rebound in housing demand appears unlikely in the near term."
New mortgage lending fell by more than 1.5% between January and July, reflecting the impact of higher rates on affordability. The situation is part of a broader European trend, as eurozone inflation has climbed to 3.8%, driven largely by energy costs.
For prospective homebuyers in Germany, the current environment is challenging. As managing money in an era of high prices and volatile interest rates becomes more complex, many are waiting for clearer signs of stability. The ECB's next moves will be crucial, but with geopolitical tensions unresolved, the outlook remains uncertain.
