2023-04-19 02:00:00
The European Central Bank might increase its interest rates in 2023, in particular to fight once morest inflation. This decision would have consequences on mortgage loans taken out by individuals. It is therefore essential to understand how this increase will impact your mortgage and what measures to take.
Direct impact on borrowers
Rising interest rates will have many repercussions on your ability to borrow. This is particularly what is mentioned by the economist Philippe Herlin. It is therefore important to know what the consequences of this situation are:
- An increase in all your monthly payments: If you have taken out a variable-rate mortgage, an increase in interest rates can lead to an increase in your monthly payments. It is therefore important to anticipate this eventuality well so as not to find yourself in financial difficulty;
- A slowdown in the real estate market: A rise in interest rates can cause the real estate market to slow down, with fewer transactions and lower prices. Borrowers who wish to sell their property may then have to revise their ambitions downwards;
- An impact on the renegotiations of your mortgage: In a context of high interest rates, the renegotiation of a mortgage may prove less attractive. Borrowers who were considering this option should therefore carefully study the conditions before embarking.
⚠️ “Rising interest rates show capital losses on bond, stock and real estate portfolios.”
➡️And it hurts: 38% of GDP in the United States and 27% of GDP in the euro zone????
✅https://t.co/HrIUhtGOLA pic.twitter.com/Wq0o6FKTru— Philippe Herlin (@philippeherlin) April 4, 2023
How to anticipate and deal with the increase in interest rates?
Faced with a potential rise in interest rates, it is important to take certain measures to adapt your financial situation and secure your real estate project. Here are some tips to help you navigate this uncertain environment:
Opt for a fixed rate mortgage
Choosing a fixed-rate mortgage secures your financing by guaranteeing that your monthly payments will not vary throughout the duration of the loan. Thus, even if interest rates increase, you will not have to suffer the direct consequences of this increase.
Make a significant personal contribution
The personal contribution represents your personal contribution to the financing of the real estate purchase. The greater this contribution, the less you borrow and the more you are protected once morest changes in interest rates. In addition, a substantial contribution can allow you to obtain more advantageous loan conditions.
Adapt the duration of your mortgage
The duration of your mortgage has an impact on the total cost of your financing: the longer this duration, the more interest you pay. To limit the consequences of an increase in interest rates, it may be wise to shorten the duration of your loan, even if it means slightly increasing your monthly payments.
Follow the evolution of interest rates and renegotiate your loan if necessary
In the current context, it is important to regularly monitor changes in interest rates to be able to react quickly in the event of a rise. If your situation allows it, do not hesitate to renegotiate your mortgage to benefit from more advantageous conditions and limit the impact of the increase in rates.
The increase in interest rates in 2023 might impact your mortgage, especially if you have opted for a variable rate loan. It is therefore essential to anticipate this eventuality and take the necessary measures to secure your financing. By choosing a fixed-rate loan, by making a substantial personal contribution, or even by adapting the duration of your loan, you can protect yourself once morest interest rate variations and carry out your real estate project.
How will interest rates evolve in 2023?
In France as a whole, there is an upward trend in interest rates. Loans contracted over a period of 7 years have an average rate of 2.60%, those over 10 years have a rate of 2.70%, over 15 years the average rate is 2.95%, over 20 years 3.05%, and over 25 years 3.15%.
How will the real estate market evolve this year?
During the month that ended March 1, 2023, prices in the real estate market experienced a period of stability, showing no upward or downward variations. However, over a one-year period, they increased by 5.6%, compared to 8.2% in April 2022.
Are real estate rates expected to fall in 2024?
According to forecasts by Eurosystem experts, growth is expected to slow gradually in 2023, reaching 3.4% in 2024 and 2.3% in 2025.
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