KfW, ministry lower rates for climate-friendly new construction

Berlin – Germany's Federal Ministry for Housing, Urban Development and Building, in cooperation with KfW, announced significant improvements to financing conditions for climate-friendly new construction. These changes, aimed at stimulating the housing market, will take effect on March 2, 2026.

The key change involves a reduction in interest rates for loans supporting the 'Effizienzhaus 55' standard. The new effective annual interest rate will start from 1% for a limited promotional period, featuring a 10-year loan term and a 10-year fixed-rate period. This funding, subsidized by federal resources, aims to make construction more financially accessible for private and commercial investors.

Further adjustments include a reduction in the interest rate for the 'Effizienzhaus 40' standard under the 'Klimafreundlicher Neubau' (Climate-Friendly New Construction) program to 0.6% annual interest, also with a 10-year term and fixed-rate period. Since the program's relaunch in mid-December, financing has been provided for approximately 17,000 new housing units.

Additionally, grant amounts for municipal construction projects will be increased. Melanie Kehr, KfW Executive Board member responsible for domestic promotion, highlighted the urgent need for housing in Germany. "By significantly lowering interest rates for climate-friendly construction, we are making residential new builds more financially viable," Kehr stated. She added that the benefits extend to investors, tenants, and society through lower credit costs, reduced long-term utility expenses, and positive environmental impact.

All financing is contingent upon the availability of federal funds, and no legal entitlement to funding exists. Detailed product conditions and current interest rates are available on the KfW website.