Rising interest rates threaten to deprive some families of mortgages. But it is possible to operate multiple levers to limit the level.
The European Central Bank (ECB) confirmed an increase in key interest rates to deal with inflation. An action that will actually affect the already tight mortgage market. As banks get financing in particular from the European Central Bank, borrowing rates will automatically rise. After years of “free” money and 1% mortgages, that ratio could soon reach 3%. The paper recalls that in the face of what some describe as a return to normalcy, old practices of financing property purchases have re-emerged. reverberationThursday, July 21.
The most obvious way is to reduce the amount borrowed with a larger down payment. For a better rate or just a loan, clearing your savings books, housing savings plans, life insurance, and other employee savings can give you a boost. “It works if you reduce the term of the loan or if the bank gives you effort on the rate during the same term, but it may prefer more savings,” notes Cecile Roquelure, director of studies at Empruntis, citing reverberation. However, this solution does not remove the barriers for the most modest families.
Variable Mortgage Return
To continue offering mortgage loans, some banks take out the “fixed” loan at variable rates. Its level may change over the years depending on the quarterly interbank rate of Euribor. Sometimes it makes it possible to circumvent the wear rate rule that sets reimbursement levels. The scope of its increase is planned in advance. For example, the rate of a loan “with an upper limit of 1” cannot increase by more than 1 point. However, this solution is only interesting to a segment of borrowers, notes Cécile Roquelaure, particularly buyers of a second home in the context of a staging loan.
It is also possible to play on the borrower’s insurance. If this is not compulsory, then many banks require the loan to be underwritten, and this inflates the repayment rate. The new “Lemoine” law of June 1, 2022 allows the borrower to change it at any time, even during the first year of the contract. This allows for more competition and a lower price. But again, this is by no means a magic formula, because highly competitive offers are rare. Thank you very much, hello, hello.Are the above suggestions helpful?