In Germany the housing bubble could burst

In Germany the housing bubble could burst

German real estate sector is still seen as a safe haven investment in 2013, but the real estate market analysts fear that the current rules of the mortgage loan can be a disaster. German Central Bank urges the authorities to take measures to "cool the property" to avoid the mortgage bubble, reports The Economist.

NowGermanyis a 10-year fixed-rate residential mortgages, after payment the borrower can re-take it on the same terms. However, a sudden increase in interest rates could spell disaster for borrowers and lenders. In turn, the flat rate is not profitable and could undermine the business of small banks, which give up to 50% of mortgage loans.

Expert on housing finance Hans-Joachim Dübel fears that Germany will begin the savings and loan crisis, as in the U.S. in the late 1980s. One of the measures is a ceiling on credit to the value of the property.

The Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC) said in recent studies that the real estate markets ofMunich,BerlinandHamburgare still leading destinations for investment.