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Home buyers are financing even more long-term

June 18, 2019
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Mortgage loans in Germany have risen to EUR 1,240 bn in recent years (+29% since 2011) thanks to the strong economy and falling interest rates. To account for increased risks for the banks, supervisory authorities decided at the end of May to activate the countercyclical capital buffer for the first time. E.g., almost half of all new loans now have a rate fixation period of more than 10 years. Banks’ business with private households got off to a strong start in 2019. Net lending in the first quarter amounted to EUR 8.8 bn and deposits increased by EUR 21.8 bn, both record figures for the beginning of the year. Both mortgages and consumer loans grew strongly. [more]

More documents contained in "Germany Monitor,Germany Monitor Household finance"

110 Documents
May 26, 2020
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1
Cash was in high demand throughout Europe at the start of the coronavirus crisis. In March, euro circulation skyrocketed by EUR 36 bn month on month. Nearly half of that volume consisted of smaller banknotes, which people use to pay for their everyday purchases. In Germany, however, consumers have increasingly been using contactless payments rather than cash since March as they wish to protect themselves against infection and because the retail sector requests that they avoid cash. Contactless card payments may have replaced a certain share of cash payments permanently even though not all customers who prefer cash will change their payment behaviour. [more]
May 5, 2020
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2
The corona crisis is currently overshadowing all other aspects of the German property market. On the assumption of a strong recovery in the second half of the year structural issues will return to the foreground and the pandemic will slow down, but not bring an end to the German property cycle. In this report we look into both the negative effects of the crisis and fundamental factors and assess the outcome for the German house and office market. A flight to safety and the potential increased immigration could have a positive impact in the medium term. [more]
May 5, 2020
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3
Due to the coronavirus, production in the manufacturing sector in Germany is expected to fall by roughly 10% to 15% in real terms in 2020. Society and business will learn to live with the coronavirus and weigh up health, social and economic risks in the process. In 2021, industrial production could rise by more than 10% in real terms on average over the course of the year. However, overall we see a risk that Germany may become less attractive as an industrial location over the coming years. Policymakers and industrial companies are likely to view the crisis surrounding the coronavirus as an opportunity to make important political decisions and get structural reforms off the ground, as they should. [more]
April 3, 2020
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4
Due to the COVID-19 pandemic, uncertainties about the future development of German real estate prices have increased considerably. A global flight to safety should drive prices for residential properties up. In the short-run, the downturn in economic activity, particularly during the first half of 2020, and considerable uncertainty about the future as well as the psychological burden are likely to result in price declines. [more]
March 24, 2020
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5
We identify the impact of negative rates on household portfolios in Germany. Real returns on cash and deposits stood at -1.2% in Q1 2019. Due to that, Germans lost around EUR 150 in real terms in 2019 per person, compared to the 1991-2014 average. The aggregate loss including claims on insurance for a representative household was roughly EUR 540 per year. The richest 10% of Germans hold 60% of the financial wealth and probably have significantly higher losses. In 2019, net lending to private households in Germany reached a new record of EUR 59.5 bn (+4.8% yoy). Mortgages saw a record increase of EUR 53 bn (5.3% yoy). Deposits rose by EUR 41.1 bn in the seasonally strong final quarter. In 2020, mortgage growth is likely to slump, even stagnate. The corona virus pandemic will probably lead to a reduction in household income and possibly to bottlenecks in the issuance of building permits. [more]
February 27, 2020
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6
The key message: If the Berlin rent cap is constitutional, the situation for investors will change dramatically. The realignment of housing policy in Berlin and the rent cap represent a radical attempt to sideline market-based mechanisms. We believe the economic supercycle in Berlin will continue undiminished and Berlin remains an attractive market for long-term oriented investors. The negative effects of the rent cap on the housing market are likely to emerge clearly in the long run. [more]
February 24, 2020
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7
German retail clients have shown relatively little interest in passive investment alternatives, compared to traditional mutual funds. Robo-advisors, which primarily invest in ETFs, have seen the number of their clients and AuM grow. German robo-advisors could manage about EUR 25-35 bn in 2025, up from EUR 4 bn today. Their pioneer clients are largely male, middle-aged and high-income. They value full control and autonomy in their financial decisions and deal with financial matters mostly online. Still, they visit bank branches quite frequently. [more]
January 9, 2020
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8
The shift towards alternative propulsion technologies, such as e-mobility, is currently the biggest challenge for the global auto industry. So far, this structural change is driven mainly by government regulation and not so much by market forces. At the moment, electric vehicles only have significant market shares if they are heavily subsidised. While e-cars can help to reduce carbon emissions in the EU, the favourable climate effect will be smaller than many supporters of electric mobility expect. A higher market share of e-cars will lead to manageable job losses in the German auto industry; however, local factors are key for value added. [more]
December 18, 2019
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9
ETFs have gained in popularity among private investors who have expanded their ETF investment multiple times in recent years to approximately EUR 35 bn. Nonetheless, ETFs remain a niche product for private investors considering that their total mutual fund assets amount to EUR 622 bn. ETFs have been introduced as passive investment vehicles, but active ETF management is on the rise. The sustained low-interest rate environment could allow ETFs to tap into new client segments. In Q3, loans to German households were up by a record EUR 17.9 bn qoq, driven by a record surge of EUR 16.3 bn in mortgages. Deposits grew by EUR 13.6 bn – the smallest increase in seven quarters. The fact that some banks impose negative rates on deposits seems to create negative sentiment among German savers. [more]
November 21, 2019
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10
As German policymakers plan to do without nuclear power, coal and lignite in the future, natural gas remains the last traditional source for power generation. And since Germany targets complete climate neutrality by 2050, natural gas will also be a transitional source of energy – nothing more and nothing less. The completion and operation of Nord Stream II is clearly in line with the declared goals of German energy policy. Nord Stream II will improve supply security and pipeline gas, such as that delivered by Nord Stream II, is more environmentally friendly than LNG. [more]
August 30, 2019
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11
The number of bank branches in Germany has declined sharply, to 28,000 in 2018 from around 40,000 in 2007. With 33 bank branches per 100,000 inhabitants, branch density in Germany is still relatively high. Almost 70% of Germans visit a branch at least once per month. Clients who have a loan or a private pension plan or are a FinTech user are more likely to visit a bank branch, in contrast to Millennials and less wealthy Germans. In Q2, loans to German households were up by a record EUR 16.9 bn qoq and 4.4% yoy. Mortgages surged by EUR 13.2 bn and consumer loans grew dynamically by EUR 2.9 bn, too. Deposits again rose strongly by EUR 34.4 bn. [more]
March 14, 2019
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12
The house price cycle in Germany should remain in place in 2019. But we expect much more divergence across regions and a heavily increasing complexity of causal impact channels. Led by immigration and the continuous labour market uptrend, house prices and rents will likely continue to rise. The risk of overvaluations and a full-blown price bubble in the German housing market is rising. However, the price uptrend is likely to continue for years to come, in Germany as a whole and in most major cities. In this report we look at the housing markets in Munich, Berlin, Frankfurt, Hamburg, Düsseldorf, Stuttgart and Leipzig and we comment on the German office market. [more]
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