German Mortgage Stock Could Have Declined in January For the First Time in Years
Yes, we know that the (German) mortgage market is in a horrible state. We also know that Germany seems worse than other European countries. All these insights were based on new business volumes. And this makes a lot of sense in order to gauge the current state of the mortgage and housing market.
But up to now we – as well as German banks – have taken comfort from the fact that the outstanding volume of German mortgages was still growing very, very strongly. Below we show its annual growth rate, which up until December was still more than two times the long-term average of 2,7% p.a. yielding 5,5% p.a. However if you look at the last data points you might already fear that our – and German banks – comfort zone, might un out soon: The decline of the annual growth rate – we are talking second derivative now! – has indeed almost steadily accelerated in recent months.
To bring this point across more clearly, we would like to switch perspectives again. We are now looking at monthly net changes of the mortgage stock. And that was indeed very weak in December 2022 at €2.3bn. You might think that December is a weak month for mortgages as people have Christmas in mind, but that is indeed not the case. December is a fairly average month and – surprise – January is by far the slowest month of the year with up until 2015 even negative net monthly growth.
Therefore, we would say that there is a fair chance of January 2023 coming in negative again being the first month since January 2017. Let’s hope it doesn’t remain like this (for long).
And by the way, we will know for sure in just a few weeks…