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90 years of LBS: building savings from then to now
90 years of LBS: building savings from then to now

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90 years of LBS! Since then, Germany has developed into the land of building society savers, in which almost 27 million building society contracts exist today. About one in three of them comes from the LBS. Read here how the success story of home savings started.

Table of contents Table of contents 90 years of LBS: from 0 to 90 million

  • The foundation of the LBS
  • The tasks of the LBS
  • The upswing in home savings
  • Building savings in East Germany
  • Beginning of the Riester-funded building society savings

Table of contents Table of contents 90 years of LBS: from 0 to 90 million

  • The foundation of the LBS
  • The tasks of the LBS
  • The upswing in home savings
  • Building savings in East Germany
  • Beginning of the Riester-funded building society savings

Bausparen is typically German, at least in numbers. The LBS Group alone - that is 8 regional state building societies - looks after around 8 million customers and manages almost 10 million contracts. In fact, the building society idea has long been known elsewhere: In the 18th century, building societies emerged in England, which are considered the forerunners of our building societies.

In 1885, Pastor Friedrich von Bodelschwingh then attempted to set up a similar institute in Germany: the “building society for everyone”. Significant imitators, however, were only found in the 1920s.

The foundation of the LBS

The housing shortage was great, and inflation after the war had deprived many people of their savings. With the introduction of the Rentenmark at the end of 1923, the situation improved. Circumstances led to an escape into real assets and a breakthrough in building society savings, to which the public building societies (later called state building societies) contributed from 1929.

In 1930 they had around 23, 000 contracts, a year later twice as many. The general conditions were difficult given the global economic crisis. From 1934, home savers benefited from state subsidies for the first time: the savings contributions were recognized as special expenses reducing taxes.

Meanwhile, the number of LBS building society savings contracts continued to increase - to a little under 100, 000 by 1938. Almost 30, 000 loans have already been allocated at this point.

Hauswunsch
Hauswunsch

The desire of owning a house with a garden is increasingly coming up among citizens.

Photo: LBS

The tasks of the LBS

The business field of building societies was initially not clearly defined. Some usually offered full financing. The LBS focused more on providing subordinated building society loans in addition to a conventional building loan (a savings bank).

This made it a pioneer: in 1938, the task of subordinated financing was enshrined in law. Building societies continued to exist during the Second World War but hardly granted any loans. After the currency reform in 1948, the institutes quickly rebuilt their business.

The upswing in home savings

The amount of housing destroyed in the war was enormous, and the state had to mobilize all efforts to rebuild it. The home loan should also play a major role in financing, which is why the subsidies were gradually expanded with and after the currency reform.

Soon the population saved hard for their own four walls: Between 1949 and 1960, the contract portfolio of the LBS grew 15 times to 1.5 million. The boom continued. In the 1960s, the LBS co-financed an average of 18, 500 house purchases per year, and in the 1970s even 53, 200. The number of building society contracts rose to almost 9 million until reunification.

Akten
Akten

More and more building society contracts are being concluded and the archives are filling up.

Photo: LBS

Building savings in East Germany

Building savings only existed in the GDR until 1970. LBS Ost, the first building society based in the new federal states, started in 1990. In 1992 the East-West German LBS Hessen-Thüringen (previously LBS Hessen) was founded. LBS recorded 1.25 million new contracts nationwide this year. This record result was topped in 1996. At that time, the state introduced the homeownership allowance to encourage the purchase of owner-occupied residential property. The allowance ceased in 2005.

LBS Erscheinungsbild
LBS Erscheinungsbild

In order to achieve a uniform appearance, the Stuttgart headquarters receives the nationwide LBS logo.

Photo: LBS

Beginning of the Riester-funded building society savings

Three years later the go-ahead was given for the Riester-funded building savings, the so-called residential Riester, as an alternative to the classic Riester pension. During this time, building rates were around 5 percent, which was considered low compared to the 1980s and 90s. LBS increasingly had to adjust to the low interest rate phase and adapted its products. Today's home savers predominantly choose financing tariffs and secure long-term loan interest rates. A home loan savings contract is and remains a tried and tested tool to create the path to ownership.

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