October 2026: rates up, more for “Jung kauft Alt”

Mortgage rates: a little higher every month since March

A home loan with the rate fixed for 5 to 10 years cost 3.81% effective on average in August. That is the highest since late 2023; a year ago it was 3.56%. The average has risen every month since March.

What it means: for a €300,000 loan with 2% repayment you pay about €1,436 a month – roughly €60 more than at last year’s rate. Every fixed-rate period is on current mortgage rates.

The ECB raises rates for the second time this year

On 10 September the European Central Bank raised its key rates by 0.25 percentage points; the deposit rate is now 2.50%. It had already raised them in June. The reason is inflation: in Germany, prices in September were 3.3% higher than a year earlier.

For savers: fixed-term deposits pay more again – one year paid 2.28% on average in August. For buyers: don’t count on mortgage rates falling soon.

“Jung kauft Alt”: bigger loans, fewer renovation duties

Since 3 August, KfW supports families who buy an older house or flat much more generously (programme 308):

• loans up to €140,000 with one child, €160,000 with two, €180,000 with three or more
• at a very low rate (0.53% effective in KfW’s example)
• instead of a full renovation, single measures such as a new heating system, windows or roof insulation are now enough

Conditions: at least one child under 18 in the household, your first home in Germany, which you live in yourself, and a household income up to €90,000 (plus €10,000 for each further child). Details at KfW (in German).

New heating law: oil and gas stay allowed

Since 29 July the Building Modernisation Act (Gebäudemodernisierungsgesetz) has replaced the old “heating law”. The rule that new heating systems must run on 65% renewable energy is gone; gas and oil heating may still be installed. Nobody has to replace a heating system that works.

Instead there is a step plan: from 2029, fossil heating must use a growing share of climate-friendly fuels (2029: 10%, 2030: 15%, 2035: 30%, 2040: 60%), and all of it from 2045.

Try it yourself

Rents rose 2.2% in a year, and so did rates. Is buying still worth it? Work it out with your own numbers: Rent or buy?

Sources: Deutsche Bundesbank, European Central Bank, KfW, German Bundestag. This overview also comes by email every month.