Bausparen proves successful internationally

The amendment of the German Bauspar Institutions Act in 1991 made it possible for Bauspar institutions to establish affiliated companies in foreign countries. At the same time that the planned economic systems in Eastern Europe were collapsing and transitioning to a construction and modernization financing was also rising rapidly. Of course, the state banks in these countries were not prepared for private housing construction financing: Loan interest rates of more than 20% made it impossible for private individuals to repay loans, while high inflation also put a damper on household savings behavior. The new market economies considered Bausparen (Contractual Savings for Housing) to be an attractive and suitable system for financing the required investments in housing construction. As a result, they supported the introduction of this financing system by creating the underlying legal conditions and introducing a lucrative government subsidy for Bauspar customers.

Real estate loans that were issued too carelessly triggered the international financial crisis. This situation showed that the purportedly “conservative” German system for financing housing construction also has considerable strengths from an economic perspective, for example the high proportion of funds coming from the borrower, and fixed interest rates on loans. In this context, the Bauspar contract functions as an additional stabilizing element. Countries with a Bauspar savings system in place weathered the crisis considerably better than nations without this financing system. Today, Bausparen makes a significant contribution in many countries to sustainable social and economic policy.