More and more Germans are prepared to take out a bank loan in order to make their dream of homeownership come true. This is the upshot of the latest Building Finance Sentiment Index released by Comdirect Bank in April 2015. The index is updated bimonthly by Comdirect. Based on a poll conducted by the public opinion research institute Forsa among more than 1,000 residents of Germany, 67 percent of the respondents consider this a good time to buy a property.
Most Home Buyers Opt for a Bank Loan
The current index value of 113.6 points confirms that the buying sentiment is above-average among respondents. To put it differently: Seven out of ten Germans are currently inclined to buy property. This past February, the index climbed to 114 points, its highest level on record since it was launched in November 2008. Meanwhile, interest rates on building finance have continued to soften since the previous poll – dropping below one percent and thus to a new all-time low in March. An index score of less than 100 points, by the way, would signal reluctance to take out a loan. The index, however, has never dropped below this threshold yet. Its lowest-ever level was recorded in late 2009 and early 2010 with a score of around 103 points.
The latest Comdirect sentiment index also revealed that less than half of all respondents would be willing to dip into savings to finance a home of their own. One in ten would also count on parental support. That being said, the preferred approach to finance homeownership for the majority of interviewees remains a bank loan.
Remember Follow-up Financing
As often as not, people buying a home today have their eyes on the future. But buyers should not let themselves get careless because of the low level of interest rates today: It is always a good idea to negotiate a fixed-interest period of 15 to 20 years when taking out a loan. In addition, property buyers should set their repayment instalments as high as possible in order to ensure that the loan is fully repaid at maturity. Doing so will lower the risk of expensive follow-up financing.