Real estate finance: credit by the insurer

Mortgage loans have always been the domain of banks. But now they get competition from insurers. These convey KfW promotional loans even directly.

He is looking for a real estate finance, is usually a bank, to extend the credit. But increasingly mix insurers and not only in the traditional way of lending a life insurance policy: “The share of real estate loans that have been completed in about an insurer has increased compared to the same period earlier this year,” says Heidi Mueller of Interhyp , the largest broker of real estate loans in this country. “This is especially true for long-term loans with a duration of 20 years and more.”

The competition between banks and insurers continues to increase: Customers can receive directly from an insurer for mortgage lending business KfW loans since early April. So far the award of a KfW loan was possible only through a bank or a building society, says the Association of German Insurers (GDV). From the perspective of the insurer doing business with mortgages many advantages: There are well calculable investment with stable earnings.

slight variations

In addition, the property market in Germany has smaller fluctuations to offer than the capital market. “Even insurers must invest their clients’ money, and since the real estate sector is an important anchor for them,” says Max fall of the FMH financial advice. “Many insurance companies use the low-interest rates,” says Herbst, “insurers must provide their customers with a legally guaranteed interest rate of 1.75 percent or more. If they complete mortgage transactions with customers over 20 to 30 years, they will immediately receive interest rates of over 3 percent. “Since, in the debt crisis and low-interest rates hardly an investor would currently invest in the long term, are the long interest rates for homebuyers from the perspective of insurers ideal.

Financing: All eggs in one basket?

Meanwhile, the pressure on margins has increased in the business of mortgage lending to banks – to providers like Interhyp are increasing their contribution, will give customers real estate loans of about 300 vendors. In addition: “The capital requirements for banks have increased, in particular, due to new regulations such as Basel III,” says Thomas Schnarr, bank manager of the consulting firm Oliver Wyman. “The banks have to hold more capital when they make loans, such as in real estate financing.”

Offers only for three to six months

From the perspective that wants take out a loan for their building or buying a home of customers, the competitive pressure in the industry is an advantage – there are better conditions for them. For customers, it makes anyway not much difference whether they pay off their loan at a bank or an insurance company. but many insurers are less aggressive in marketing that advertise low-interest rate offers to mortgage customers as online banks. However, Müller reports of Interhyp, evacuate some insurers relatively long periods one in which they do not take fees for the provision of a real estate loan.

Usually, these offers are only valid for three to six months. “But there are insurers who take up to 12 months no fees for the provision of a loan.” This may be useful not only for homeowners who do not yet foresee exactly when they need the money. Even customers who want to replace a loan of forwarding loans and want to secure low-interest rates benefit. The longer the allocation of a loan is still outstanding, the higher the cost. But if the deployment costs up to 12 months eliminated, in this case, the choice of an insurer may be beneficial.

Until the classic banking

According to Max, autumn insurers have long penetrated into the traditional banking business, these include offers such an account for the daily allowance and the fixed deposit. For example, if a life insurance policy will be paid to a customer, the money usually goes to a bank account. The bank finds out and has the interest to sell the customer a new investment product. The money goes, however, to an account that the insurer offers to the customers, the insurer is able to advertise other products such as a pension.

Despite growing competition, it is unlikely that insurers will trump the banks in real estate financing. According to the GDV, life insurers had awarded end of 2011 mortgage loans for about 50 billion euros, equivalent to 6.7 percent of their investments. It is also unlikely that all insurers will expand its mortgage business. Some vendors even refrain entirely sure. Other insurers who have opted got sometimes also problems: had an insurer temporarily granting real estate loans stop because of the onslaught of customers was too big.