After many hesitations, the rates stop procrastinating. They’re going down, and it’s clear. On average, applicants for property can clearly obtain interest loans from 0.05 to 0.10 points lower than last month! Why this turnaround? Our explanations.
The role of OATs
The banks had been hesitating for a few months, applying decreases or increases depending on the durations and the files but without following any real trends. It would seem that today they have decided and decided to follow OATs (Assimilable Treasury Bonds ). These are the banks’ credit rates: they represent the level of interest at which they borrow the funds then loaned to individuals.
OATs therefore directly determine credit rates : the higher they are, the more banks will have to increase their interest rate in order to be able to repay the high cost of their borrowing while maintaining their margin. However, the good news today is the opposite and OATs are declining “today they display 2.09% against 2.50% at the start of January” underlines Miel Cruner, spokesperson for Good Bank.
Since OATs were not the only determining factor, the banks were hesitant to pass on their reduction to their prices. But it is now done and with an average file an individual can now get 3.10% over 15 years, 3.45% over 20 years and 3.85% over 25 years against 3.15%, 3.55 % and 3.95% a month ago.
For a loan of $ 200,000 this represents a saving of $ 900 over 15 years, $ 2,400 over 20 years and 2,640 over 25 years. The drop in February can therefore represent up to two monthly savings.
What about variable rates?
With such low fixed rates, is it really worth choosing variable interest rates?
“Due to their very / too small gap with fixed rates, they have almost no interest, ” says Miel Cruner. ” They should therefore only be considered if this small rate differential is necessary to access financing.” So if your debt is still too high for you to be granted a fixed rate credit, your file may be accepted for a variable rate loan.
The latter indeed show 3% over 15 years, 3.10% over 20 years and 3.55% over 25 years. Do the math but it is true that being already very low, it is more likely that variable rates will go up rather than down.
And tomorrow ?
Miel Cruner nuances this good news: ” It should not last ” she warns, the current shooting window is particularly interesting, but is not intended to be maintained “. And the Good Bank spokesperson maintains its forecasts: ” as we continue to think, credit rates should go up during the second half of 2014 “. So it might be time to take advantage of the situation now.