With the increasing likelihood of war by Russia in Ukraine, the numbers have literally exploded in recent weeks.
The 10-year swap rate had risen in February 2022 almost doubled to approx. 80bps and headed back towards March at the turn of the month 60 bps.
interest level 2010 vs. 2020
Real estate investors could in the decade 2010 – 2020 benefit from falling interest rates. Interest rates typically fell between the time the LOI was signed and when the interest rate was fixed. The interest rate assumptions from the purchase calculation were undercut by a lower interest rate fixing – the return on equity increased.
In addition to a sharp rise in inflation in the Eurozone, calls for an increase in key interest rates are becoming louder and louder. Limited to no oil and gas supplies from Russia are likely to 2022 continue to fuel inflation. The ECB will have to act. Consequently, increases in the key interest rate can be expected in the foreseeable future.
The current price level on the real estate markets was formed by a decade of falling interest rates. For current purchases with rising interest rates, attractive conditions are becoming increasingly important in order to invest successfully.
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