The European Central Bank (ECB) has been the central bank of the eurozone since 1998 and is responsible for ensuring price stability. It aims for an inflation rate of close to, but below, two percent in order to promote economic growth and secure jobs. For you as a prospective buyer or owner of real estate, it is important to understand how the ECB influences the real estate market through its interest rate decisions.
The ECB uses its key interest rates as a tool to influence commercial banks’ lending. The three most important interest rates are the main refinancing rate, the deposit facility rate, and the marginal lending facility rate. If the key interest rate falls, banks can borrow money more cheaply and often pass on these conditions in the form of lower mortgage interest rates. If key interest rates rise, loans become more expensive accordingly. In this way, the ECB controls economic development and responds to inflation or economic cycles.
Falling interest rates usually lead to cheaper loans for real estate buyers. Demand for residential and commercial real estate rises, which often supports or increases prices. Companies also benefit from favorable financing options, which promotes investment. For savers, however, lower interest rates mean lower returns on checking and savings accounts. Overall, a cut in interest rates can stimulate the economy and get the real estate market moving.
Rising interest rates make loans more expensive and can deter potential buyers. Demand for real estate declines, which can affect prices. Owners may have to expect longer selling times and lower prices. At the same time, savers benefit from attractive interest rates on savings deposits. The ECB uses rising interest rates to curb inflation and cool the economy. It is therefore important for you to monitor interest rate developments in order to find the optimal time to buy or sell.
In 2025, the ECB continued its policy of lowering interest rates. In June 2025, the main refinancing rate was lowered to 2.15 percent, the deposit facility rate to 2.00 percent, and the marginal lending facility rate to 2.40 percent. This was already the fourth interest rate cut this year. Experts expect further moderate cuts, which could further reduce borrowing costs. This currently improves the conditions for real estate financing for you.
The ECB’s decisions directly influence the interest rate landscape and the real estate market. If you want to buy or sell a property, it is important to understand the current developments. Our team at Victor Investment supports you in Berlin and Brandenburg with comprehensive market knowledge and individual advice. Feel free to contact us to clarify your questions about interest rates, real estate valuation, and purchase decisions, and to confidently implement your real estate projects.
