In an era of ultra-low interest rates, financing property purchases is among the few reliable revenue streams banks have left. For consumers, a mortgage is a cheap way to invest in a home of one’s own. For banks, the business is consistently profitable. But while Germany is going through a real estate boom, many would-be buyers can’t take part.
New data shows that mortgage lending this year seems to have dipped noticeably. Some financial institutions blame this counter-intuitive slowdown on tighter E.U. lending laws, but others suggests bigger lenders are using the new rules as an excuse not to loan money.
According to the German Savings Banks Association, or DSGV, mortgage lending among 408 member banks fell 9 percent to €24 billion ($26.81 billion) in the first half of 2016, compared to the same period last year. The decline is not the result of reduced demand in the private real estate market but changes in lending laws, the association claims.