Home loans in Germany are now more expensive than at any time since 2009, during the global financial crisis, as the renewed flare-up of the Iran war fuels inflation fears and pushes interest rates higher, according to Munich-based mortgage broker Interhyp.
The typical rate on a ten-year loan is now close to 4.5% which is above the previous peak of just over 4.4% reached at the end of 2023, according to the broker.
The average rate on ten-year mortgages has climbed from 3.9% as recently as May, Interhyp CEO Jörg Utecht stated, citing data.
Interhyp’s latest survey of lenders, published on 15 October, put the ten-year average at about 4.4% but it continues to rise. However, most banks polled expect rates to hold steady over the next two months, while 60% see them falling over six to 12 months and 40% expect further rises.
Both Interhyp’s figures and data on home loans to households from the Bundesbank, Germany’s central bank, show borrowing costs have not been this high since the 2009 financial crisis.
Data from the European Central Bank (ECB) also confirmed how quickly borrowing costs have swung.
The average German mortgage rate jumped from 1.48% in early 2022 to 4.15% at the end of 2023, eased to 3.57% in early 2025 and climbed back to 3.91% in the second quarter of this year, before the latest jump.
War and the ECB
Utecht blamed the latest rise mainly on the Iran war and the inflation fears it has fuelled.
To keep prices in check, the ECB has raised interest rates twice this year, lifting its key deposit rate to 2.5%.
For an average home loan, the recent increase adds almost €200 to monthly repayments, Utecht said, adding that some customers had become more hesitant.
He also explained rates would only come down significantly once the conflict is resolved for good, which he saw little sign of so far.
Despite the increase in borrowing costs, "German house prices continue to edge higher," Dutch bank ING said in an analysis last month, arguing that the housing market’s weakness was showing up everywhere except in prices.
Prices rose 0.6% year on year in the second quarter of this year, according to the federal statistics office Destatis, leaving them more than 5% above their 2024 low but still 8.2% short of their 2022 high.
Meanwhile, new mortgage lending was down more than 1.5% between January and July.
ING said "the chronic lack of housing supply has prevented a more pronounced correction in prices", adding that residential construction "remains subdued".
It also warned that "a meaningful rebound in housing demand appears unlikely in the near term".
Borrowers will next look to the ECB, which announces its next interest rate decision on 29 October.
