Bausparkasse system in Germany – building societies as a secure source of finance

Berlin, Germany Better Finance, Using household savings


In contrast to their decline in many countries, building societies (german: bausparkassen) have remained important to the housing finance needs of countries such as Germany and Austria, where they provide a very large share of residential mortgage loans. Bausparen (contractual savings) is characterized by fixed, below-market rates on savings and subsequent loans. The closed circuit of savings and loans attempts to insulate customers from financial market volatility and members get stable loans at a predetermined, fixed rate of interest.



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Special regulation and tight supervision are considered vital to their success. In Germany Bausparkassen are credit institutions and fall under the German Banking Act and the Bausparkassen Act, which defines them as specialized credit institutions. They are closely supervised to build savers’ trust and attract savings over long periods to ensure that they will eventually be able to obtain a loan.[1] Such institutions are also growing in other countries including Croatia, Czechia, Hungary, Slovakia and Kazakhstan.

In Germany, bausparkassen are either privately owned, or publicly owned by federal or provincial governments. German Landesbausparkassen ( are public savings and loans banks which operate at the sub-national level and focus on low-interest residential mortgage loans. Their system involves closed-contract savings and loan circuits, where loans are funded by long term savings and amortization payments. [2] Bauspar loans are funded by contractual savings schemes, typically of seven years, which can be complemented by government savings and tax incentives. Such loans are long term, have fixed predictable interest rates and typically complement other loans financing home purchase.

[1] For additional information, see

[2] For an overview of Bausparen System, see