Rise in demand for property loans continues

vdp member banks’ property finance business between January and September 2025 totals EUR 107.3 bn

In the first three quarters of 2025, the banks which together make up the Association of German Pfandbrief Banks (vdp) extended property loans totalling EUR 107.3 bn. This was 18.2% more than in the corresponding period one year earlier (Q1-Q3 2024: EUR 90.8 bn). The third quarter of this year alone accounted for new property loans totalling EUR 37.2 bn, which represents an increase of 20.4% compared with the third quarter of 2024 and is the highest quarterly figure since autumn 2022.

The main driver of the rise in property finance in the first three quarters of this year were residential property loans. Loans for the construction and purchase of residential properties totalled EUR 67.7 bn, which was 19.0% higher than in the corresponding period one year earlier (Q1-Q3 2024: EUR 56.9 bn). Residential property loan commitments totalling EUR 21.7 bn were recorded for the third quarter alone. Thus, the commitment volume for the immediately preceding quarter was achieved again (Q2 2025: EUR 21.6 bn).

Commercial property loans likewise saw a substantial increase in the period under review. They advanced to a volume of EUR 39.6 bn, which was 16.8% higher than in the first three quarters of 2024 (Q1-Q3 2024: EUR 33.9 bn). With new loans totalling EUR 15.5 bn, the third quarter was the strongest quarter for commercial property finance so far this year. Compared with the corresponding quarter one year earlier, loans were up by 32.5% (Q3 2024: EUR 11.7 bn).

“The property finance business of our member banks is picking up substantially – despite the challenges that continue to face the property market.” Jens Tolckmitt

“Considerably more loans will be granted in 2025 than in the year before. The property finance business of our member banks is picking up substantially – despite the challenges that continue to face the property market,” vdp Chief Executive Jens Tolckmitt commented. He went on to say that the growing volume of residential property loans does not signal an easing of the property market, since by far the greater part of the banks’ financing business relates to existing buildings, not new construction. Tolckmitt pointed out that the increase in commercial property financing, on the other hand, is a good indication that the lowest point in this segment has likely been passed. “Given the low level, however, this development should not be overinterpreted.”

Residential property loans: multi-family houses see strongest growth

Recording a volume of EUR 33.4 bn, loans for one- and two-family houses accounted for just under half of new lending for residential properties (EUR 67.7 bn). The increase in the first nine months of this year over the corresponding period one year earlier came to 16.8% for one- and two-family houses. The segments condominiums and multi-family houses saw financing volumes of EUR 14.0 bn and EUR 16.7 bn respectively (growth rates of 14.8% and 29.5% respectively) in the period under review. Loans extended for other residential properties totalled EUR 3.6 bn (+12.5%).

Commercial property loans: growth rates exceed 10% across the board

Financing for office properties, which rose by 12.6% year on year to reach EUR 19.7 bn in the first three quarters of this year, again represented the largest contribution to total loans for commercial properties amounting to EUR 39.6 bn. Loans for both retail properties and hotels likewise experienced double-digit growth in the months January to September of this year compared with the first nine months of 2024. While lending for industrial buildings totalling EUR 1.4 bn more than doubled, loans for other commercially used properties increased by 19.6% to EUR 5.5 bn.

Property finance portfolio increases slightly

As at 30 September 2025, total property loans granted by the vdp member banks came to EUR 1,031.9 bn. This was slightly higher than in the immediately preceding quarter (Q2 2025: EUR 1,029.5 bn). Once again, properties located in Germany made up by far the greater part of the financing volume, accounting for a share of 87%.