An average of 0.55 percent increase in loan interests since the beginning of the year, with a very clear increase in March, banks that have paid more than 2 percent interest in 20 years (1.80 percent on average)… The mortgage market has been experiencing an unprecedented situation since 2017.
Faced with multiple loan filings being withdrawn due to very low usury rates (rates at which a bank is not allowed to lend) and debt ratio to comply with (up to 35%), floating rate loans seem to be making a comeback. banks had abandoned them a few years ago due to the drop in flat rates.
This is what mortgage broker MeilleurTaux.com has observed since early July.
An interest rate that changes according to market rates
Unlike a fixed rate loan, where the interest rate stays the same for the duration of the loan, a variable rate loan (or reviseable rate) depends on the variations of the index used, usually the “Euribor index”, explains broker Cafpi.
Broker Empruntis states that Euribor, established by the European Banking Federation (FBE), is “the average rate at which European banks lend money to each other.” The revision of variable loan interest rates is made every year according to the rates of financial markets.
Therefore, it is not possible to know in advance the total cost of the loan. Advantage: This allows you to get a more advantageous rate than a fixed rate loan.
2.20% variable loan over 20 years
A variable rate, yes, but limited. “Since the beginning of July, we have seen the yield on variable rate loans capped at “1” and this will accelerate,” says Maël Bernier, communications director at MeilleurTaux.
It is a variable rate loan, but the maximum rate is known for the entire term of the loan. “This now makes it possible to get a loan of 1.20 percent for 20 years,” he explains, a rate that cannot exceed 2.20 percent, hence the “1” cloak (+1 point at most).
In his view, a product that continues to be prudent for the borrower, variable rates “did not require massive over-indebtedness at the time. It’s worth it when the flat rates are 2%,” he says. As a matter of fact, this can ensure that you do not exceed the attrition rate so that you can see that your credit file has been accepted.
Source From: Google News