The CBC Bank (CBC) is coming under increasing pressure. Financial lawyer announced last week that the ECB could change course. In autumn she wants to put her instruments to the test. Very low inflation and now a very strong euro have led to this decision.
Thus, the chance of a turnaround in interest rates, which more and more financial experts demand, is much better. Many people would be pleased about this step – with the exception of budding builders and homebuyers. A higher base rate would mean higher construction mortgage costs. The question arises as to what should be done should market rates actually pick up.
First, a brief look at the dimensions of the interest rate reversal. It is not clear if she really comes. Financial lawyer has been good for surprises on several occasions, nobody would be surprised if the next central bank meetings are like last and the key rate remains unchanged. Even if the ECB raises its key interest rate for the first time, this should only happen at the lowest level in order to generally send a signal to the markets. Further and above all significant interest rate increases are extremely unlikely – at least for a time window of the next 12 months.
The reason for this is not least the difficult situation in Europe. Especially in Germany, the economy is booming, higher interest rates would be appropriate. In other countries, several banks are again under pressure, so a lower base rate would help. For that reason alone, the ECB can not agree to a sharp increase in the base rate. Likewise, it can be assumed that a continuation of the previous bond purchases follows.
If you want to buy a property in the foreseeable future, you should not feel under pressure. Nevertheless, it seems generally reasonable to lend the conditions for the real estate loan as soon as possible. Still, mortgage rates are very cheap, so this opportunity to take advantage.
Even if the project is still a few months in the future, the financing can be fixed quite soon. Many banks have no difficulty with it, when financing customers only retrieve their loan amounts months later. Almost always, the lending amounts are free of interest-free subsidies for half a year – and often even longer for construction projects.
In the case of follow-up financing, there is the risk that the new loan (which is taken up via the residual debt amount of the old financing) will become more expensive and increase the monthly installment. Fortunately, those who are already financing can secure themselves particularly well. Bausparvertrag and forward loans are two attractive instruments for interest rate hedging.
Here, the procedure may sometimes seem complex. Nevertheless, it is possible to obtain good protection without much effort. Our financing specialists will be happy to check which exact options exist in your company. The advice is of course free and without obligation, ie you take no risk with your request and can always decide for yourself how and with whom you finance.