Real estate loans: why mortgage rates are rising again - Immo

Real estate loans: why mortgage rates are rising again – Immo

Mortgage loan rates are on the rise again, particularly under the effect of strong demand from prospective buyers.

Bad news for candidates for the purchase of a house or an apartment: while property prices continue to climb, now the mortgage rates go up too. According to figures collected by the site www.guide-epargne.bethe best negotiated rates for a 20-year fixed-rate loan have crossed the symbolic per cent mark in recent weeks, whereas they had been below this threshold for many months.

Several factors seem to explain this rise. Firstly there is inflation and strong household demand. The pandemic continues to increase the needs in terms of space and place. A house with a garden or a terrace and an additional room to set up an office are at the top of the list of criteria for candidates for purchase. So much so that the Belfius experts count on a average real estate inflation of 5% for this year.

In addition, some banks would also have reached the quota imposed by the BNB. A quota which, for the record, provides for each bank a volume of loans whose borrowed capital exceeds 90% of the value of the property purchased is capped at one third of its total production of new loans. So, info or intox: are the banks tightening their conditions? In any case, the mortgage machine has been running at full speed over the past six months. Just look at the figures unveiled at the beginning of August by Belfius and ING Belgium on the occasion of the publication of their accounts for the first half of 2021: 30% more mortgage loans between the beginning of January and the end of June for the group led by Marc Raisière and even 40% more during the same period for the house on avenue Marnix.

5%

Average real estate inflation predicted this year by Belfius experts.

Volatility

Faced with this strong demand from households, rising mortgage rates remains for the moment, however limited. “Although there is currently a slight increase, it should be noted that mortgage rates remain historically extremely low, and we do not expect a significant rise in the benchmark rate in the short term (Belgian State bond rates, OLO, Editor’s note)”, says Valéry Halloy, French-speaking spokesperson for BNP Paribas Fortis, leader of the mortgage market in Belgium. “Of course, it is not impossible to observe a some volatility, he continues. At the beginning of the year, we also saw a slight increase in interest rates of a few basis points. At the same time, we do not expect interest rates to fall much further. Betting on a future rate cut seems risky.”

Whatever, borrowing is still very advantageous. “With a monthly payment of 690 euros, the customer who took out a loan in May 2021 with an interest rate of 1.33% was able to borrow up to 145,000 euros. With an equivalent monthly payment of 690 euros, the customer who had contracted a loan at the beginning of 2003 with an interest rate of 5.50% could only borrow 100,000 euros. This difference translates into a 45% increase in borrowing capacity over the last 17 years”, illustrates the door -word of BNP Paribas Fortis.

Bad news for candidates for the purchase of a house or an apartment: while property prices continue to climb, mortgage rates are also rising. According to figures collected by the site www.guide-epargne.be, the best rates negotiated for a 20-year fixed-rate loan have crossed the symbolic bar of one percent in recent weeks, while they were evolving below this threshold. for many months. Several factors seem to explain this rise. First, there is inflation and strong household demand. The pandemic continues to increase the needs in terms of space and place. A house with a garden or a terrace and an additional room to set up an office are at the top of the list of criteria for candidates for purchase. So much so that Belfius experts are counting on an average real estate inflation of 5% for this year. In addition, some banks would also have reached the quota imposed by the BNB. A quota which, for the record, provides for each bank a volume of loans whose borrowed capital exceeds 90% of the value of the property purchased is capped at one third of its total production of new loans. So, info or intox: are the banks tightening their conditions? In any case, the mortgage machine has been running at full speed over the past six months. Just look at the figures unveiled in early August by Belfius and ING Belgium on the occasion of the publication of their accounts for the first half of 2021: 30% more mortgage loans between the beginning of January and the end of June for the group led by Marc Raisière and even 40% more during the same period for the house on avenue Marnix. Faced with this strong household demand, the increase in mortgage rates remains limited for the time being. “Even if there is currently a slight increase, it should be noted that mortgage rates remain historically extremely low, and we do not expect a significant rise in the short-term benchmark rate (bond rate of the Belgian State, OLO, Editor’s note)”, says Valéry Halloy, French-speaking spokesperson for BNP Paribas Fortis, leader in the mortgage market in Belgium. “Of course, it is not impossible to observe a certain volatility, he continues. At the beginning of the year, we also saw a slight increase in interest rates of a few basis points. At the same time, we don’t think interest rates will fall much further. Betting on an upcoming rate cut seems risky.” Anyway, borrowing is still very advantageous. “With a monthly payment of 690 euros, the customer who took out a loan in May 2021 with an interest rate of 1.33% was able to borrow up to 145,000 euros. With an equivalent monthly payment of 690 euros, the customer who had contracted a loan at the beginning of 2003 with an interest rate of 5.50% could only borrow 100,000 euros. This difference translates into a 45% increase in borrowing capacity over the last 17 years”, illustrates the door -word of BNP Paribas Fortis.

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