2024-03-22 11:22:58
March 21, 2024 Today at 08:34
Good news for borrowers: the average interest rate on 20-year mortgages has fallen below 3%, but this may not last.
After some two years of increases, interest rates on mortgage loans continue their long-awaited decline and cross a threshold downward course. Indeed, according to the site savings guide, which compares the credit offers received by consumers from different banks, the average rate negotiated for a 20-year mortgage loan currently stands at 2,95%a level that has not been reached since the summer of 2022.
On Immotheker, an online broker which also compares interest rates, the average 20-year rate has not yet crossed this threshold, but is also showing a decline (3.19%).
However, the Belgian ten-year interest rate (Belgian OLO at 10 years)which is used as one of the benchmarks for mortgage loans, has been rising for around ten days and stood at 2.92% at the close this Wednesday.
“We will not return to the levels observed at the end of the year, when rates were close to 4%.”
Bernard Keppen
Chief Economist at CBC
“Long-term rates are extremely volatile for the moment”, points out Bernard Keppenne, chief economist at CBC. “But mortgage rates do not change as quickly as market rates, the impact is smoother. So there is a shift phenomenon and the mortgage market is currently benefiting from the previous drop in long-term rates”, analyzes Bernard Keppenne.
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Light and slow decline
In other words, this situation might not last. “Interest rates on mortgage loans could rise soon, but we will not return to the levels observed at the end of the year, when rates were close to 4%,” reassures the economist.
Nearly 100 euros less interest compared to peak rates
If the where compares one the interest charge for a loan taken out during the peak of rates in October-November to that for a loan at 2.95%, the saving amounts to almost 100 euros on a monthly payment.
Indeed, for a loan of 250,000 euros over 20 years at the fixed rate of 2,95%, monthly payments amount to 1.375,36 euros, for a total interest charge on the credit of 80.087,23 euros.
The same loan taken out last November at the rate of 3,7% cost its borrower monthly 1.467,78 euros (i.e. 92.42 euros more) and represented a total interest charge of 102,267.30 euros, or a little more than 22,000 euros in additional interest.
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