New Mortgages: Weakest March since 2008
March 2023 Numbers Are a Mixed Bag
The volume of new German mortgages in March 2023 was 53% lower than in the same period last year. This is the second-largest decline on record after February 2023 of minus 54% YoY. The decline is also driven by the record new business of €32.3bn in March 2022. At that time, borrowers locked in lower rates on a massive scale.
Stabilisation at Very Low Level For Now…
Total new mortgage business of €15.3bn in March 2023 is 27% higher than in February 2023, which looks like a lot at face value. However, March is generally the month with the highest growth rates, averaging 19% MoM since 2003. So March 2023 is just a little better than that, which can probably be explained by the fact that mortgage approvals are currently taking longer than expected, but were still completed before Easter holidays. So March 2023 suggests a stabilisation at a very low level for now.
New business volume includes both rolled-over and renegotiated loans.
Looking at new business numbers in a different way, it was still the weakest March since the financial crisis in 2008.
Despite subdued new business, mortgage outstanding is still growing at 4.4% YoY. This is well below the peak of 7.2% yoy in August 2021, but still above the long-term average of 2.7% yoy.
Mortgages are the most important loan category for German banks, accounting for 43% of customer loans.