Mortgage rates for ten-year loans in Germany have reached their highest level in over two years, averaging 3.85 percent. This rise is linked to increasing yields on federal bonds, which recently stood at 2.87 percent. Experts forecast a further moderate upward trend in 2026.
Prospective home buyers or builders in Germany must now anticipate higher financing costs. According to the Munich-based credit broker Interhyp, mortgage rates for ten-year loans currently average 3.85 percent – the highest level in over two years. At the start of 2025, the average was still 3.15 percent, rising to around 3.5 percent over the course of the year before climbing again now.
The recent increase stems from the yield development of ten-year federal bonds, which have sharply risen to 2.87 percent. Mortgage rates closely follow these yields, as banks often secure funds through covered bonds, whose conditions correlate with federal bonds. “Realism is called for with mortgage rates. With planned growing budget deficits and the special fund, significantly higher bond issuances are looming from 2026,” warned Interhyp sales director Mirjam Mohr in a statement to the RedaktionsNetzwerk Deutschland. She added: “If the state needs to borrow more money from the capital market, yields rise. This means in turn: Mortgage financing has little room to go down and will tend to become more expensive.”
For the coming weeks, Mohr expects a moderate rise toward four percent, with possible fluctuations. The Lübeck-based credit broker Dr. Klein shares this view and anticipates a slight upward trend. At the same time, property prices are increasing: After a decline from late 2022, they turned around in 2024 and rose by about three percent last year. “There are no signs that demand in the real estate market is waning. On the contrary, too little is still being built anew and the supply of existing properties remains low in sought-after regions,” said Michael Neumann, chairman of Dr. Klein. For 2026, he considers a three percent increase realistic, up to four or five percent in metropolises.
There are positive signals in building permits: According to the Federal Statistical Office, they rose 6.8 percent in October 2025 compared to the previous year – the fifth consecutive month of growth. However, the Main Association of the German Construction Industry warns that a trend reversal may only occur in 2027. The Cologne-based Institute of the German Economy estimates only 215,000 new apartments for 2026, while 320,000 are needed annually until 2030, as determined by the Federal Institute for Research on Building, Urban Affairs and Spatial Development.
Demand for real estate loans is growing: The Association of German Covered Bond Banks reports an 18.2 percent volume increase from January to September 2025, mainly for residential properties. “The real estate financing business of our member institutes is noticeably picking up – despite ongoing challenges in the real estate market,” emphasized VDP managing director Jens Tolckmitt. This primarily concerns existing properties, not new builds, indicating persistent shortages and further rent increases in major cities.
