Germany: 10 year fixed from 1.15%

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RedOnion

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Since the announcement of KBCs 10 year fixed mortgage rate, I've been doing a little research into other Eurozone countries, and in particular how they are funding their loans.

Germany seems to be the lowest rate for 10 years. I've found Commerzbank offering 10 year fixed, at under 60% LTV for as low as 1.15%.

I don't know much about the German market, but fixed terms of 5 -30 years appear to be common. The other thing of note is not everyone gets the same rate; property type, age and location are factored as well as the borrower's credit ratings.
Looking at the Bundesbank statistics, the average effective yield on all mortgages between 5 and 10 years fixed rate was 1.67% in August, on a volume of 7.2bn in the month.
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For the most part the banks seem to be able to fund via covered bonds with AAA ratings. Over 10 years the yield is as low as 40bps.
 
Hi RedOnion

Do you know if a borrower would have to pay an arrangement fee for that Commerzbank product?

It strikes me that the underwriting process must be fairly intensive to take in all those factors.
 
Hi, I don't believe so, but it's hard to work out exactly (far too long since I tried to learn German!)
They quote the same nominal rate and APR, so there mustn't be.
The interesting thing is the bank you deal with might not be the one that's funding it. They claim that they find you the best rate across 400 providers. My guess is that there are small regional banks that only lend to certain areas, and the bigger banks act almost like a broker.
I'll have a go with Google translate over the weekend to see what I can work out.
 
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