What this rate measures
Each month, German banks report to the Bundesbank the interest rate and the amount of every new loan they make to households for buying a home. The Bundesbank publishes these as part of its MFI interest rate statistics, split by how long the rate is fixed at the start: floating or up to one year, one to five years, five to ten years, and over ten years.
This page shows the ECB's composite of those figures, the "cost of borrowing for households for house purchase", which the ECB publishes for every euro country on its Data Portal. It averages the rates for each fixation period, weighting each by a 24-month moving average of how much was lent at it. That smoothing means one month in which borrowers rushed into ten-year fixes does not jolt the line, and it lets you compare Germany with the Netherlands or France on the same basis. The Bundesbank's own total for housing loans weights by each month's volumes instead, so the two can differ by a few hundredths of a point.
The rate is the agreed annual rate on the loan. It leaves out fees and the cost of any insurance, so it is lower than the effective annual rate (effektiver Jahreszins) a lender must show you in an offer.
How German mortgages are priced
Most German home loans are an Annuitätendarlehen with a long Zinsbindung: the rate is fixed for an agreed period, commonly ten years or more, and the monthly payment of interest and repayment stays the same throughout it. When the period ends you agree a new rate, with the same bank or by moving the loan, on whatever is left.
Because the rate is fixed for years, lenders price it from long-term market rates such as swap rates and Pfandbrief yields rather than from the ECB deposit facility rate directly. Those long rates move with expectations of where the ECB will take its rates over the whole fixed period, so new German mortgage rates often move before a decision, not after it, and a loan already in its fixed period does not move at all.
German law gives a fixed-rate borrower one exit that matters when rates fall. Under section 489 of the Civil Code, you can end a fixed-rate loan in any case ten years after you received it in full, with six months' notice, without paying the lender compensation. For a Zinsbindung of fifteen or twenty years, that right is what lets you refinance after ten if rates have dropped. Ending a fixed loan earlier usually means paying the bank a Vorfälligkeitsentschädigung for the interest it loses.
Comparing it with a quote
This average mixes every fixation period and every loan size, so read it as the level of the market rather than the rate you will be offered. Your own rate depends on the Zinsbindung you choose, how much of the price you borrow, and your income. Compare a quote with the line's direction over recent months, and compare quotes from different lenders using the effektiver Jahreszins, which includes the costs this series leaves out.
To turn a quote into a monthly payment, use the mortgage calculator for Germany, and to weigh buying against renting at today's rates, the rent vs buy calculator.
Reading the chart and the table
Each point is one month, dated the first of the month it covers, and the series begins in January 2003 when the harmonised euro area statistics began. Figures arrive about five weeks after the month ends, and the latest months can be revised. The table lists every month, and the CSV download carries the ECB's own values.