Building interest rates 2026: Using the interest rate turnaround - How buyers and owners can finance more favourably and secure their follow-up financing

Building interest rates 2026: Why hope for more favourable financing is now growing again

After two years of noticeably higher financing costs, there are signs that construction interest rates will ease in 2026. The combination of easing inflation, a cautiously looser monetary policy and falling capital market yields is opening up options for buyers and homeowners again. For buyers, this means more living space or a better location for the same budget. For owners with expiring fixed interest rates, follow-up financing is becoming more predictable - and often significantly cheaper with the right strategy.

What will drive interest rates in 2026 - and why could they become more favourable?

Mortgage interest rates are primarily based on the yields of long-term German government bonds and Pfandbrief spreads, plus the bank margin. If inflation eases further towards 2 %, the pressure on the base rate decreases - capital market yields can fall and banks have to calculate lower risk premiums. At the same time, competition for customers with good credit ratings increases, which tends to squeeze margins. Assumption: If inflation continues to normalise, further interest rate cuts compared to the peak values in 2023/24 are plausible.

• Inflation: decline stabilises real yields and dampens interest premiums.
• Monetary policy: Further, cautious key interest rate cuts would be possible in 2025/26.
• Capital market: Slight fall in 10-year Bund yields = tailwind for debit interest.
• Bank competition: More offers, better conditions and promotions (e.g. higher special repayments).

Seize your opportunities now: Strategies for buyers and owners

The interest rate turnaround rewards good timing - but not reckless waiting. Anyone planning to buy or refinance in 2026 should compare conditions and secure options now. Important: Financing packages are becoming more diverse again. Banks are honouring solid equity ratios, sustainable properties and clean documentation with noticeably better offers.

• Forward loan: Secure interest up to 36 months in advance; the premium is only taken into account when the loan is paid out.
• Commitment interest-free period: Negotiate longer deadlines for new construction/modernisation.
• Choose your fixed interest rate wisely: 10/15/20 years - depends on planning security and special repayments.
• Special repayment & repayment rate change: Build in flexibility for salary increases or bonuses.
• KfW subsidy: Check programmes for climate-friendly new construction/modernisation - reduces effective costs.
• Object quality: Energy-efficient properties often receive better conditions.

Example of follow-up financing 2026: Plan ahead instead of reacting too late

Initial situation: Residual debt € 320,000, fixed interest rate ends 07/2026. Assumption today's 10-year condition 3.5 % p.a. A 24-month forward typically costs approx. 0.02 %/month surcharge, i.e. around 0.48 %. Secured borrowing rate today: approx. 3.98 % p.a. With 2 % amortisation this results in a total of 5.98 % or approx. 1,600 € per month.

If you wait until 2026 and the market stands at 3.0 % borrowing rate, the initial total charge would be 5.0 % (approx. €1,333 per month). If the interest rate remains at 3.8 %, it would be 5.8 % (approx. €1,547 per month). Conclusion: Forward is worthwhile if security is important or you want to avoid upside risks; without hedging, you will only benefit if the market actually falls significantly. The right decision depends on risk appetite, budget calculation and time flexibility.

Fixed interest rates and amortisation: how to make a robust decision

10 years Fixed interest rates often offer the best interest rate, but are more risky with a high residual debt later on. 15-20 years cost a little more, but provide peace of mind and planning security. It makes sense to combine a high initial repayment with contractual unscheduled repayments (e.g. 5-10 % p.a.) and a Repayment rate change, to adjust in the event of changes in income. Anyone using variable components should include caps (interest rate ceilings) and buffers in the budget calculation.

Why banks will be wooing you again in 2026

If refinancing pressure decreases, the room for manoeuvre increases: margins fall, premiums for low-energy properties become more differentiated, digital processes accelerate commitments. For customers, this means more negotiable parameters than just the borrowing rate - such as payment speed, free instalment breaks, free partial payments for new builds or extended commitment-free periods.

How to prepare your financing - in 7 steps

• Update the budget calculation (income, fixed costs, buffer for ancillary costs).
• Structure equity (incl. reserves for notary, tax, modernisation).
• Collect creditworthiness documents: Proof of salary, bank statements, credit report.
• Property documents: exposé, extract from the land register, declaration of division, energy performance certificate, building description.
• Compare offers: target/effective interest rate, fixed interest rate, amortisation, special repayment, fees.
• Check subsidies (e.g. KfW, municipal programmes) and integrate them into the overall calculation.
• Simulate decision: Test instalments at +/-1 % point interest and with different repayment options.

Conclusion: The likelihood of more favourable building interest rates in 2026 is growing - but the best deal comes from clever preparation, a clear comparison and financing that suits your life plans. We accompany you from the market analysis to the commitment - and negotiate conditions that take the pressure off your budget in the long term.

Ready to optimise your financing? Secure a non-binding initial consultation now - we will get back to you promptly with a customised assessment: www.flexmakler.de/kontakt.