Do you want to acquire a property, a plot of land, carry out work or renovate your house? Now is the time, don’t hesitate, mortgage interest rates have never been so low on the market. Fixed rate or variable rate? This is the question you will inevitably ask yourself. The answer in a few lines.
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 with a fixed rate.
Why are interest rates so low?
The financial crisis has 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 interest rates are so low that the trend for the coming years can only be upwards. So, if you take out a mortgage with a very low variable rate today, this rate will likely only rise in the coming years. Don’t forget that a mortgage 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 is very interesting when interest rates are high at the time of your mortgage loan. In this scenario, you might think that interest rates will vary downwards in the coming years, which is not the case at the moment.
What makes interest rates 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, particularly thanks to a very high savings rate.
When is it interesting to refinance your mortgage?
You have taken out a fixed-rate mortgage and notice that interest rates are very low now. You would like to refinance your loan and benefit from a lower rate. This is possible. For mortgage refinancing to be worthwhile, we recommend waiting at least 7 years after signing your contract. You should also see a reduction in your interest rate of at least 1% to offset the notary fees and the cost of releasing 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 that suits your current situation.
