The European Central Bank (ECB) is expected to continue its interest rate hikes in September. This presents a challenge for Deutsche Bank, as income from interest-related business tends to decrease under such conditions. However, recent data on mortgage lending in the real estate sector offers hope that a countertrend might emerge.
The sharp interest rate increases by the ECB in the summer of 2022 had caused a significant drop in residential real estate lending. Any recovery this year has been sluggish at best. But now, there is reason for optimism.
The Association of German Pfandbrief Banks (VDP) reports that its member institutions issued significantly more real estate loans in the second quarter than before. The volume of loan commitments reached a two-year high, which could be seen as an indication of a trend reversal, according to a report by Bloomberg.
The financing volume for the last quarter amounted to 31.2 billion euros. This means that new business exceeded the previous year’s figures for the third consecutive quarter, achieving the highest level since the third quarter of 2022.
A recovery also appears to be underway in the office real estate market: Prices for such properties rose by 0.3 percent in the second quarter compared to the first quarter of the year. This marks the first increase since the market downturn in 2022.
Deutsche Bank is one of the institutions that are members of the Association of German Pfandbrief Banks. If the real estate market sees a revival, the declining interest margin could at least partially be offset by an increase in new business.