The effects of the sharp rise in interest rates combined with the uncertain economic outlook are creating a sense of crisis in the financing markets. The current situation is assessed much less favourably than the outlook. The situation indicator has fallen by 53.4 points to minus 55 points, the expectations indicator by 35.5 points to minus 48.3 points.
Residential properties most affected
The slump in sentiment in the second quarter affected all asset classes equally. The residential real estate sector was hit the hardest: the situation indicator plummeted by 66.7 points, and expectations dropped by 54.2 points. The hotel sector, on the other hand, was hit relatively moderately, but comes from an already tighter financing level. Especially in the assessment of the next six months, hotels got off lightly with a drop of only 13.7 points. Of all asset classes, the lowest margins are still to be found in residential real estate – even though they recorded the highest increase compared to the fourth quarter of 2021. On average, banks charge a margin of 112 basis points for core products and 162 basis points for value-add products. With 213 basis points for core real estate and a credit margin of 271 basis points in the value-add segment, banks charge the most for hotel financing. An entirely different picture emerges for loan-to-values (LTVs). The average LTVs for residential properties in the core and value-add segments have fallen slightly compared to the fourth quarter of 2021, while they have risen for all other property types. In the core segment, they currently range between 60 per cent (residential) and 73 per cent (logistics), and in the value-add segment between 59 per cent (residential) and 69 per cent (logistics). “While the average LTVs for logistics properties have never been higher than in the second quarter of 2022 since data collection began in the second quarter of 2014, they are currently at a new low for residential properties,” says ZEW economist Frank Brückbauer.