Mortgage interest rates: discover the key rates

Inspired by the FED, the European Central Bank has set up since January 2015 a massive buyout plan for private and public debts. These lowered key rates ultimately allow influencing the rates that banks give to businesses and individuals.

By doing so, the ECB has created great opportunities for people who would like to renegotiate their loans or investments in rental yields.

The lowering of the policy rate

The downward readjustment over a year and a half of bank fixed rates makes it possible to consider a renegotiation of bank loans of individuals.

According to many experts, one-third of French households are above the acceptable level of debt (33%).

A situation due in particular to the underwriting of consumer credit, while it would be possible to reduce these levels through the renegotiation of interest rates in the context of a buyback mortgage.

This reduction in key rates will, therefore, have several consequences:

The effect on growth is that the fall in interest rates, therefore, affects the cost of liquidity granted by banks and financial institutions. Mechanically, companies start borrowing again in order to develop their competitiveness, and individuals consumer;more.

This consumption, therefore, redoubles growth and the state thus perceives more revenues which de facto decrease the budget deficits.

The effect on the euro, along with the decline in key interest rates, leads to a depreciation of the euro against other currencies, making it more competitive for exports. This leads to a better competitiveness of companies in the eurozone that increase their exports and who hire more to be able to meet order deadlines.

The consequences for individuals are that they will, therefore, be able to have new opportunities for renegotiating debt. They are of the type to the consumption or of the type of real estate.

For the offer of consumer credit, it is more interesting for purchases at term because;the costs of these financing will be very low, and it will be more interesting than using the money to invest in the plans. saving.

With regard to the mortgage loan, this decline will re-evaluate the outstanding property, and reduce either the number of monthly payments of the said credit or reduce the number of its monthly payments.

Credit Renegotiation Broker’s Council

The companies specializing in brokerage for credit buybacks bring their skills to individuals by offering them a service of intermediary in customized banking operations.

Thanks to their expertise based on the quality charter of the company, intermediaries in banking operations, also known as “broker” undertake to defend in the best interests of the customers they represent also giving greater credibility to the ” borrower profile “has its last when submitting the file to lenders.

The recourse to a professional brokerage specialist allows a real competition of the credit houses with an optimal qualitative result for the customer (s).

It is true that a difference of one percentage point between the initial rate in progress and the renegotiated rate creates substantial savings allowing a decrease in monthly payments both in volume and in value.

Despite the inherent costs of this kind of banking operations such as:

  • The amounts of the early repayment allowances which are fees charged by the original lender if the redemption is made by another body
  • Mortgage handover fees and the switchover of the latter to the benefit of the new organization
  • The fees of the new organization

It should be noted that despite these imperatives most credit redemptions still remain clearly profitable.

Mortgage credit: definition and types

Useful tips and explanation about mortgage loans

In a mortgage loan, a client has an amount of money committing to return it normally through regular installments, along with the associated interest. It is carried out in the medium or long term, and it is usually supported by the guarantee of a home, under conditions agreed with the bank, and set out in a contract.

There are several types of mortgage loan/credit, normally determined by the type of installments (since they are open and may vary over time, if the client requests it, and the bank approves it). For example, it may be agreed to pay smaller fees at the beginning, to grow over the years. This modality can be interesting if, for example, we contemplate a salary increase. Or it could be the other way around: paying larger installments at first, and decreasing in time (convenient if, for example, we foresee another expense in the medium or long-term).

A mortgage loan shares many similarities with the mortgage loan. Although they have the same purpose, they work differently. It is important to know the particularities of each modality when deciding on one or the other; we have to choose the one that best suits our conditions.

Thus, the mortgage loan is closed: it has certain conditions in a contract, that in case they want to be modified by the client, once the mortgage loan is formalized, a notation must be made (for example, to extend the term, the amount to be financed, etc.).

On the other hand, in the mortgage credit, an amount of money is granted, and the owner can dispose of the total or only a part of that money granted. Whenever you need more money you can have the remaining one, provided that the total amount you are using does not exceed the credit limit granted by the bank.

On the other hand, there are several other factors that distinguish both products, such as the interest rate -generally higher in the credits-, the commissions, or the subrogations, etc.

If you are going to apply for a mortgage loan, a good advice is to first analyze your current and future financial situation, as far as possible. When it is time to return it, it is important to plan the payment, since it is usually returned in several years, and it must be kept in mind when calculating. Contemplate other expenses that you are going to have in time, look at your savings capacity and allocate a fixed percentage of this to return your credit.