The European Central Bank policy rate is currently at a historic low . Due to the ongoing financial and economic crisis, more and more central banks around the world tend to a zero interest rate policy. The European Central Bank has a key interest rate by only one percent of a zero interest rate policy is very close. Since interest rates are generally directly related to the short-term bank interest rates in both the investment, and loan losses makes an impact, just for property developers, the question of how the rates set by the European Central Bank and the interest during construction are related.
is in fact also among the key ECB interest rates and deferred interest mortgages for a relationship. Although interest rate changes have only short-term to short-term construction financing, but also have implications not apply to the construction interest for longer-term financing of the hand. These occur but usually one with a certain delay. Often, even when the prime rate established for a long time on a certain level. Historically, however, it is unlikely that the prime rate in the longer Time moves close to zero. A prolonged recession and a further contraction of the economy would, however, may in fact lead to this effect.
However, one should remember that the building interest in any case very little room to move "down" have. for almost a decade, the interest during construction are at historically low levels. For funding over a period of 10 years, the interest during construction are currently only around 4 percent. The likelihood that the interim interest may decline further, is therefore significantly smaller than the probability that the interim interest will increase in future. In this context, one should always keep in mind that certainly does not provide a bank will be to give building loans for free. to finance
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