Impact of Construction Interest Rates
The continuous rise in construction interest rates has significantly increased home financing costs, especially affecting builders whose projects often exceed their planned budgets. Since 2022, construction interest rates have more than tripled, with current top rates ranging between 3.12% and 3.98%.
An increase in the interest rate of about one percentage point can raise the monthly payment by around 150 euros and increase the total interest costs over the term by about 61,000 euros.
Money-Saving Tips for Home Buyers and Builders
- Utilize Flexibility in Interest Rate Lock-ins: Short-term interest rate locks allow one to benefit from potential interest rate decreases, while longer locks offer more stable conditions under rising expectations.
- Take Advantage of Interest Dips: Due to the expected fluctuations in construction interest rates, one should seize every opportunity to secure more favorable conditions.
- Utilize Pre-Financing: Pre-financing can cover construction costs while waiting for better interest rates.
- Cost Management in Construction Projects: Detailed budget planning and optimized material costs help avoid unexpected expenses.
- Consultation with Experts: Professional financial advice can highlight the best strategy and minimize risks.
Forecast for the Future
Experts expect construction interest rates to fluctuate around the 3 to 3.5%-mark in 2025, with occasional dips below that. For the rest of 2025 and beyond, rates are projected to be between 3.5% and 4.0% for 10-year loans.
By employing these strategies, builders can achieve significant savings and reduce financial burdens considerably.