Despite a significant increase in home prices, home buyers in Hamburg today borrow less money from the bank than in 2008. This was revealed by a regional survey of Interhyp AG. According to the self-claimed largest broker of residential mortgages in Germany, the so-called loan to value ratio (LTV), which indicates the relationship between house price and the loan amount, decreased from 69.9 per cent in 2008 to 63.3 per cent in the first half of 2014. The study also showed Munich and Hamburg as the cities with the highest private equity in house financing.
Conservative financing in Hamburg
“Hamburg homebuyers to be very conservative and solid in their funding. They are able to secure their loans with existing assets”, says Mathias Breitkopf, head of Interhyp’s Hamburg branch. “Even though interest rates are historically low, lending volumes have not increased sharply – an important indication that Germany is not experiencing a nationwide real estate bubble.”
Second in national ranking
In Hamburg, the average purchase price for a property climbed from 267,000 euro in 2008 to almost 411,500 euro in the first half of 2014, Interhyp’s regional analysis of more than 4,760 financing cases shows. During these six years, the average loan amount increased from 186,800 euro to 260,600 euro. With homebuyers in Hamburg, however, introducing more private equity in their financing, the LTV still decreased by 6.6 per cent on average.
“Banks reward a low LTV with better credit, because it decreases the risk of default for them,” explains Breitkopf. The lowest LTV among the eight cities compared by Interhyp was reached by real estate buyers in Munich with 60.4 per cent in 2014, the highest with 72.8 per cent and 71.9 per cent by Frankfurt and Dresden borrowers, respectively.
The average LTV for eight cities (as of the first half of 2014):
1 Munich: 60.4 per cent
2 Hamburg: 63.3 per cent
3 Stuttgart: 66.4 per cent
4 Berlin: 67.0 per cent
5 Dusseldorf: 68.8 per cent
6 Cologne: 70.3 per cent
7 Dresden: 71.9 per cent
8 Frankfurt/Main: 72.8 per cent
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