German mortgage rates have surged to their highest level since the 2009 financial crisis, driven by concerns over the Iran war and persistent inflation fears. According to Munich-based mortgage broker Interhyp, the typical rate on a ten-year loan now stands close to 4.5%, surpassing the previous peak of just over 4.4% reached at the end of 2023. The average rate has climbed sharply from 3.9% as recently as May, with Interhyp CEO Jörg Utecht citing the latest data.
Interhyp’s survey of lenders, published on 15 October, placed the ten-year average at about 4.4%, but rates continue to rise. While most banks expect rates to stabilize over the next two months, 60% anticipate a decline over six to 12 months, and 40% foresee further increases. Both Interhyp’s figures and data from the Bundesbank confirm that borrowing costs have not been this high since the 2009 financial crisis.
The European Central Bank (ECB) has raised interest rates twice this year, lifting its key deposit rate to 2.5% in an effort to curb inflation. Utecht attributed the latest rise primarily to the Iran war and the inflation fears it has triggered. He noted that the recent increase adds almost €200 to monthly repayments for an average home loan, causing some customers to hesitate.
Despite the rise in borrowing costs, German house prices continue to edge higher, according to Dutch bank ING. Prices rose 0.6% year on year in the second quarter of this year, leaving them more than 5% above their 2024 low but still 8.2% short of their 2022 high. New mortgage lending was down more than 1.5% between January and July, with ING warning that a meaningful rebound in housing demand appears unlikely in the near term.