The total volume of residential loans issued by institutions belonging to the Association of German Covered Bond Banks (VDP) increased at the start of 2026. Between January and March this year, these institutions provided out $39.8$ billion euros, representing a $5.9$ percent increase compared to the same quarter of the previous year.
Compared to the immediate preceding quarter, the financing volume also rose by $4.2$ percent.
Residential loans accounted for the largest portion of the property financing volume during the reporting period, with new business reaching $25.2$ billion euros-a $2.4$ percent growth compared to the previous year. Commercial real estate saw a more dynamic development, growing by $12.3$ percent to reach $14.6$ billion euros, though this represented a rise from a relatively low level over the long term.
VDP Managing Director Jens Tolckmitt stated on Wednesday that any potential impact of the conflict in Iran on the financing business would not be apparent until the second quarter. Regarding the elevated risks in residential financing recently identified by BaFin and the Bundesbank, he categorized them as “overstated” confirming that the probability of default remains low.
The VDP banks believe that the German government’s plans for building type E are “on the right track” to counter further cost increases, but this will not lead to an immediate decrease in the demand for external funding.
Breaking down the total residential financing volume of $25.2$ billion euros, $11.9$ billion euros (47.2 percent) were allocated to loans for single- and two-family homes. Loans for multi-family houses followed with a volume of $6.5$ billion euros ($25.8$ percent), and loans for condominiums totaled $5.6$ billion euros ($22.2$ percent).
Specifically within commercial real estate financing, the $14.6$ billion euros in new business in the first quarter of 2026 was primarily driven by loans for office premises ($6.9$ billion euros) and retail buildings ($4.7$ billion euros), both of which achieved double-digit growth compared to the previous year’s quarter. Loans for hotels amounted to $0.6$ billion euros, industry buildings to $0.2$ billion euros, and other commercially used properties to $2.2$ billion euros during the January to March period.
As of March 31, 2026, the total property loans provided by the VDP member institutions reached $1,040.4$ billion euros, keeping the overall real estate financing stock level stable from the previous quarter ($1,040.3$ billion euros on December 31, 2025). According to the association, the vast majority of this financing volume, $85.4$ percent, was directed towards properties located in Germany.
