Average Home Loan Interest Rises to 1.87%: Is Variable Interest Rate Interesting Again? † MyGuide . Guide

Buyers who borrow between 80 and 100 percent of their property value at a fixed rate over 20 years are paying an average interest rate of 1.87 percent today, compared to 1.40 percent at the beginning of January. Since January 2019, average interest rates have been at their current level. This is evident from the Immotheker Interest Scale.

Brecht Coene of Spaargids.be also notes that official rates for banks have risen in recent weeks. Outside Quotations that buyers send to the comparison site, this trend cannot be concluded at the present time. “It usually takes some time before the file is settled and the borrower presents the interest rate that they received,” he explains. “We will only see a potential impact in a few weeks. It amazes me that banks have been less permissive with ‘harder’ files for some time now. So borrowers who bring less equity to the table are in a less enviable negotiating position. Interest rates – despite the recent increase – remain attractive. Although it is entirely possible that interest rates below 1 per cent for twenty years will be a thing of the past at least for a while.”

Borrowers choose between a fixed or variable interest rate. A fixed interest rate is set for the entire term of the loan. With a variable interest rate, adjustments are made over the term based on a benchmark that follows general market developments. If this indicator goes up, the interest rate on your loan will go up. In the event of a dip, you benefit and you have to pay less interest. The interest on a loan with a variable rate of interest may be compounded at most, regardless of how the market rate of interest develops. The variable rate of interest is initially less than the fixed rate of interest.

Brecht Coene points out that the choice between a variable and a fixed interest rate has not been discussed in recent years. “Most buyers wanted the lower full-term interest rate fixed immediately,” the expert explains. He doesn’t see that changing right away. “Even after rising in recent weeks, interest rates are still relatively low.”

Tip: What do fixed and variable interest rates mean to you? Make a simulation here†

The variable interest rate exposes the borrower to a further rise in interest rates. The reverse also applies, of course: if you rebound toward the minimum rates for the past two years, you benefit from the variable interest rate. The potential for the downside to occur is still very limited at the moment. The potential benefits may not outweigh the risks of a higher interest rate. The fact that the interest rate can double at most during the entire term provides the necessary protection and peace of mind. The low entry rate is an additional argument, although the difference with the fixed rate is relatively limited.”

According to Brecht Coen, it is difficult to say how interest rates will develop. Much depends on the long-term interest rates, which mortgage interest rates are related to. If interest rates rise significantly in the coming months, the variable interest rate will become more prominent. There seems to be no reason to panic at the moment. Whether it is a fixed rate or a variable rate, banks will always be more flexible for clients who have strong negotiating advantages. Good ability to repay remains critical.”

See here the interest rates that Spaargids.be readers have been able to negotiate in recent months.

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