Property financing shows upward trend

Up by 17%: vdp members extend more property loans in the first half of 2025  

The first half of 2025 saw the banks which together make up the Association of German Pfandbrief Banks (vdp) extend property loans worth a total of EUR 70.1 bn. The property financing volume rose by 17.0% compared with the first half of 2024. This positive trend was largely attributable to lending for the construction and purchase of residential properties.

At the end of the first six months of 2025, the volume of new residential property loans totalled EUR 46.0 bn, which was 22.0% higher than in the corresponding period one year earlier (EUR 37.7 bn). Total commercial property loans in the first half of 2025 came to EUR 24.1 bn. This was an increase of 8.6% compared with the first half of 2024 (EUR 22.2 bn).

“Investors and private households have now apparently adjusted to the new interest rate level.” Jens Tolckmitt on the higher demand for property loans

“The upturn in the property financing market continues. From January to June of this year, vdp member banks gave appreciably more property loan commitments than in the corresponding period one year earlier,” remarked Jens Tolckmitt, vdp Chief Executive. “Strong demand for housing and high investment pressure were the two main drivers. Loan commitments increased significantly for both owner-occupied residential properties and multi-family houses. Investors and private households have now apparently adjusted to the new interest rate level which, incidentally, is favourable in a long-term comparison.” The upward trend continues in the commercial property segment, too, albeit from a low level and with less momentum than for residential properties, Tolckmitt pointed out. “We expect the developments seen in the first half-year to continue in the second, when growth will again be fuelled primarily by residential property lending.” The geopolitical and economic environment remains an uncertainty factor, he added. 

Residential property loans: property classes with double-digit growth

All property classes contributed to the rise in the volume of residential property loans to EUR 46.0 bn. The strongest increase in relative terms, by 30.3% year on year, was recorded for loans for multi-family houses (EUR 11.6 bn). Loans for one- and two-family houses (EUR 22.8 bn) and for condominiums (EUR 9.3 bn) likewise showed double-digit growth rates of +21.9% and +17.7% respectively. Lending for other residential properties rose to a total of EUR 2.3 bn (+4.5%).

Commercial property loans: stronger increase for retail properties than for offices

Compared with the first half of 2024, total commercial property loans between January and June of this year came to EUR 24.1 bn. Just under half of this, at EUR 11.8 bn, was accounted for by office properties, total lending for which rose slightly year on year (+1.7%). Loans for retail properties went up by 13.6% to EUR 6.7 bn. Although loans for industrial buildings and hotels recorded significantly higher growth rates (+80.0% and +46.2% respectively), their absolute financing volumes of EUR 0.9 bn and EUR 1.9 bn respectively were, as usual, considerably below the corresponding figures for offices and retail premises.

Property financing portfolio increases slightly

As at 30 June 2025, the portfolio of property loans granted by the vdp member banks totalled EUR 1,029.5 bn. This was 0.4% higher compared with 31 December 2024. At EUR 894.4 bn (86.9%), properties located in Germany made up by far the greater share of the financing volume.