The rates for housing loans remain particularly favorable to this day, although interest rate hikes are on the horizon. Will housing loans become more expensive in 2019 and is it worthwhile to take out a housing loan quickly?
Until today, you can take out a housing loan on particularly favorable terms. The interest rate for 25-year residential loans with a fixed rate is 2.22 percent on average. If you borrow less than 80 percent of the market value of your home, you will even see the price tag drop to an average of 2.13 percent. The buy-in program of the Agree bank is one of the most important explanations for the low interest rates.
Termination of purchase program
Central Columbine buys 15 billion USD in debt every month until the end of 2018. The regulator wants to stimulate inflation in the USD zone in this way. Mario Draghi, the president of the Agree bank, is aiming for an inflation of just under 2 percent.
According to an estimate by USDtat, inflation in the USD zone dropped to 2.1 percent in September. Core inflation – inflation without volatile energy and food prices – remains extremely low at 0.9 percent. In any case, Draghi does not deviate from his plans.
Last month he repeated that he was going to end the bond buying program at the end of December. According to Cream bank, a cooling of the economy or low core inflation is not an issue. “Consumption remains strong thanks to the rise in employment and higher wages. The growth markets are stabilizing. Our basic scenario does not change, “says the chairman.
Mortgage interest remains low
In any case, borrowers will be the first to feel an interest rate rise in their portfolio. As soon as the Agree bank stops the buy-back program, the chances are that the long-term interest rates will rise. The rates for a mortgage loan with a fixed interest rate evolve along with the rates for the 10-year Belgian bonds, or OLO over ten years.
The question remains how strongly the rates will rise. In August 2018, the OLO was around 0.80 percent in 10 years. Five years ago that percentage was 2.60 percent. At that time, borrowers paid an average of 4.25 percent for a 25-year loan with a quota higher than 80 percent. The OLO at 10 years must therefore still rise sharply before the price tag of a residential loan rises to the level of the past. The competition between the Colombians also has an impact on interest rate movements.
Lenders are putting each other on fire
More and more financial players are finding their way to the mortgage market. For example, in recent years we have seen the rise of digital home loans. With competitive rates, players such as HelloColumbine! and Good lender shook the traditional players on fire. For example, those who today take out a 25-year mortgage loan with Good lender pay an annual cost percentage of 1.94 percent if they meet a number of conditions. A quota lower than 80 percent is one of them.
Because of this fierce competition, the chance is extremely small that the mortgage rates will suddenly peak high. A gradual rise in rates seems more realistic.
Extra discount at the end of the year
Moreover, those who take out a housing loan during the last months of the year can sometimes benefit from extra favorable rates. Local offices are often instructed to meet certain borrowing and investment objectives.
As a customer you can of course benefit from this. For example, some Colombians will offer you an extra-affordable mortgage interest to get you over the line. View the current rates for home loans here.