Home loans are currently finally noticeably cheaper than at the beginning of the year and could fall even further: for the first time since the summer of 2023, variable loans are available with an effective interest rate below 5 percent, according to the credit advisor Infina. Fixed-interest loans are even cheaper at 4.13 percent.
Infina’s current credit index shows the savings for homebuilders and property buyers with the new terms for 20-year fixed interest rates and variable rate home loans. The conditions of 12 banks are compared. According to Infina, in July 2023 you still paid an average of 4.762 percent with a variable interest rate, effectively including costs that was 5.37 percent.
A 20-year fixed-rate loan cost 4.05 percent (effectively 4.58 percent). Currently you only have to calculate 4.97 percent for variable financing and only 4.13 percent for a fixed interest rate offer. Converted, this means: The market average monthly interest (for financing of 100,000 euros over 25 years) is now 523.15 euros with fixed interest and 568.27 euros with variable interest.
Given expectations that the ECB and Fed’s sustainable inflation target of 2 percent will be reached by 2026, both central banks have initiated interest rate cuts that are likely to go further. Interest rates for residential loans with variable interest rates, based on the 3-month Euribor, could therefore fall to 3.50 to 3.75 percent in June 2026, provided that the ECB’s inflation target of 2 percent is sustainably achieved, Infina expects. boss Christoph Kirchmair. “Housing affordability is improving.”
This is also reflected in the demand: after the sharp decline in housing loans, noticeably more financing has been completed in recent months, says the National Bank. This again amounts to more than 1 billion euros per month, 30 percent more than at the beginning of the year. If you want to sleep peacefully, you should resort to fixed interest rates, expert Kirchmair advises: “Currently, borrowers continue to benefit from attractive offers with fixed interest rates for 25 years and longer. This long-term security is extremely valuable.”
It may be worth making a deal now as, in the longer term, a slight increase in interest rates for long-term fixed rates can be expected, as these tend to be higher than interest rates for variable rate loans. For borrowers, this means that protection against rising interest rates for a period of 30 years does not require paying higher interest rates than, for example, three or five years of protection. Hedging new loans via the long-term interest rate is currently particularly attractive, even though the interest benefit of the long-term fixed interest rate has already shrunk somewhat compared to before.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
