Fixed rate or variable rate?
For several months, interest rates have been so low that we can only advise you to take out a mortgage loan with a fixed rate.
Why are interest rates so low?
The financial crisis is having a lasting impact on Europe, and banks have no choice but to offer very low rates if they want to revive credit activity.
Why choose a fixed rate?
Mortgage loan interest rates are so low that the trend for the coming years can only be upward. Thus, if you were to take out a mortgage loan today with a very low variable rate, this rate would likely only increase in the coming years. Let’s not forget that a mortgage loan can last 25 years and sometimes even 30 years. Over such a period, many events can occur. Therefore, if you have the assurance today of securing a low fixed rate for the next 25 years, why deprive yourself of such security?
When to choose a variable rate?
A variable rate mortgage loan is very interesting when interest rates are high at the time of concluding your mortgage loan. Indeed, in this scenario, you might think that interest rates will vary downward in the coming years, which is not the case at present.
What causes interest rates to vary?
Interest rates are set by the National Bank of Belgium based on the state of public finances. Today, public finances are not in good shape in Belgium, but paradoxically, it borrows at very low rates on the markets (sometimes even negative, which is a historical first). Why? Because the market estimates that Belgium’s finances are among the best in Europe and that Belgium offers significant solvency guarantees, notably thanks to a very high savings rate.
When is it interesting to refinance your mortgage loan?
You have taken out a fixed-rate mortgage loan and you notice that interest rates are very low now. You would like to refinance your loan and benefit from a lower rate. It is possible. For mortgage refinancing to be interesting, we advise you to wait at least 7 years after the conclusion of your contract. You should also observe a reduction in your interest rate of at least 1% to offset the notary act fees and the granting of the release of the mortgage registration.
Nothing beats a detailed case-by-case analysis
In this matter, we can only advise you to make an appointment with our brokers and discuss your case in detail. There is no ready-made answer, but an analysis of your financial situation will allow us to find, together, the solution adapted to your current situation.