Figure of the month for April: 1.4 trillion euros
The total volume of construction loans issued by German banks and savings banks to private households reached a new record high in 2020: €1.4 trillion. This figure, curiously, is very close to the government spending incurred in Germany in 2020 alone to manage the coronavirus crisis. (According to the Finance Ministry's response to an inquiry from the Left Party in December 2020, the latter amounted to approximately €1.3 trillion).
According to a recently published study by the auditing firm PwC, demand for real estate experienced another boom in 2020. Despite the coronavirus pandemic, economic uncertainty, and rising property prices, banks and savings banks recorded consistently high interest in real estate financing. New business with construction loans by banks and savings banks rose to a new record high of €273 billion in 2020 – up from €263 billion in 2019. Thanks to the stable framework conditions (favorable terms due to low interest rates, limited supply on the real estate market, and rising property prices), the number and volume of real estate loans granted not only remained at a high level but even increased further.
Aside from this insight, the figures can also be interpreted as follows: all property owners in Germany would have to repay their existing mortgages in one fell swoop, and the state would then have to confiscate this money – solely to offset the costs incurred in 2020 due to the coronavirus crisis. This is, of course, neither conceivable nor feasible in this form, but it nevertheless brings to mind the practice of forced mortgages, with which private landowners in West Germany were made to contribute to the economic aftermath of World War II through the Equalization of Burdens Act of 1952. One can only hope that the state will find a different solution this time!
You can find more information here:
https://de.wikipedia.org/wiki/Zwangshypothek
Photo: © Erich Westendarp/Pixabay.com
About the author
Harry Mohr
Real estate agent (Chamber of Industry and Commerce)Harry Mohr, author of this article
