New business in residential mortgage loans saw a significant decline in May 2026. The volume of newly granted loans amounted to EUR 17.2 billion, representing the lowest level since December 2024. This figure marks a decrease of 19% compared to the previous month and 13% compared to May of the previous year.
Analysts interpret this development as confirmation of a downward trend in construction financing, which has been evident for several quarters. The previously increased figures, often classified as pre-emptive effects due to the war, now appear to be reversing. This base effect significantly contributes to the current development. Additionally, May is seasonally a month with traditionally lower transaction volumes in the lending business.
The current situation continues to be influenced by a number of constant burdening factors. These factors cumulatively impact the demand for residential mortgage loans and activity in the property market. No relief is discernible in this regard so far.
- —Stable to rising property prices, which continue to limit the affordability of homeownership.
- —A higher interest rate environment, which increases the monthly burden for borrowers.
- —Persistent general economic uncertainty, which curbs investment decisions.
The weak month of May reinforces the rather subdued outlook for the entire year. Hopes for additional growth impetus through potential reforms in the summer months remain to be seen. A short-term trend reversal is not expected by market observers given the existing structural challenges. The development in the coming months will show whether this trend consolidates or whether external factors can cause another shift.
