More property loans at the start of 2026

• Volume of finance provided by vdp member banks rises to EUR 39.8 bn
• vdp addresses BaFin’s concerns over LTV ratios in connection with Bundesbank’s “WIFSta” survey

Between January and March of this year, the banks which together make up the Association of German Pfandbrief Banks (vdp) granted property loans totalling EUR 39.8 bn. Compared with the corresponding quarter in 2025, this represented an increase of 5.9% (Q1 2025: EUR 37.6 bn). Positive growth (4.2%) was likewise recorded compared with the immediately preceding quarter (Q4 2025: EUR 38.2 bn).

The greater part of total property finance in the quarter under review was again accounted for by residential property loans. Here, new lending amounted to EUR 25.2 bn, which was up by 2.4% year on year (Q1 2025: EUR 24.6 bn). The volume of new loans for commercial properties rose at a somewhat faster pace, with a growth rate of 12.3%, albeit from a low level when viewed over the long term. The total achieved was EUR 14.6 bn (Q1 2025: EUR 13.0 bn).

“Loan-to-value ratios calculated by the Bundesbank on the basis of WIFSta overestate the actual risk.” Jens Tolckmitt

“The property finance market was still experiencing a slight upswing at the beginning of 2026. However, the potential effects of the Iran war on lending will not be seen until the second quarter,” vdp Chief Executive Jens Tolckmitt pointed out. Moreover, he responded to recent statements by the Federal Financial Supervisory Authority (BaFin), which had spoken of increased risks in property finance following the Bundesbank’s “WIFSta” survey results for the fourth quarter of 2025. (WIFSta is a data collection system for residential property lending.) “The loan-to-value (LTV) ratios calculated on the basis of WIFSta overstate the actual risk. This is because a WIFSta LTV refers only to the property to be financed – additional collateral provided by borrowers when the property to be financed is not sufficient as collateral is not taken into account.” What is more, a high LTV generally goes hand in hand with a high borrower credit rating, which would mean a low probability of default in these cases, Tolckmitt said.

“The reasons for the high LTVs are to be found on the cost side,” Tolckmitt continued. He explained that, on the one hand, transaction costs in Germany are comparatively high; on the other, building costs have surged over a long period of time. With its plans regarding building type E, the German federal government is on the right path to counter further cost increases, he said, but this will not lead to a drop in borrowing requirements in the short term.

Regarding the prospect raised by BaFin of the activation of macroprudential instruments, Tolckmitt remarked that such a step would only be justified if a self-reinforcing spiral of rising property prices, relaxed lending standards and rapidly rising lending were to occur – which is not the case, however. He commented that property price increases are roughly in step with inflation, lending is showing only moderate growth overall, and lending standards are stable. The Bundesbank confirmed as much in its recent Bank Lending Survey, Tolckmitt pointed out.

Residential property loans: one- and two-family houses predominate

Of the total volume of loans granted by Pfandbrief banks for residential properties amounting to EUR 25.2 bn, EUR 11.9 bn or 47.2% was accounted for by loans for one-and two-family houses. These were followed by loans for multi-family houses to the tune of EUR 6.5 bn (25.8%) and condominiums totalling EUR 5.6 bn (22.2%).

Commercial property loans: financing for offices totals EUR 6.9 bn

New business in commercial property loans totalling EUR 14.6 bn in the first quarter of 2026 was largely attributable to loans for office properties (EUR 6.9 bn) and retail premises (EUR 4.7 bn). Both property categories experienced double-digit growth rates year on year. While lending for hotels came to EUR 0.6 bn between January and March of this year, loans for industrial buildings totalled EUR 0.2 bn. Loans for other commercially used properties totalled EUR 2.2 bn.

Sideways movement for property finance portfolio

As at 31 March 2026, total property loans granted by the vdp member banks came to EUR 1,040.4 bn. Thus, the property finance portfolio was on par with the previous quarter (31 Dec. 2025: EUR 1,040,3 bn). Properties located in Germany made up by far the greater part of the financing volume, accounting for a share of 85.4%.