The average interest rate for a 25-year fixed-rate mortgage exceeded 4% this week for the first time since 2014, according to Wednesday’s Immotheker Finotheker barometer, which compares thousands of mortgages daily in Belgium.
The consulting firm recommends that buyers who want to benefit from lower interest rates in the future consider a mortgage with an annual adjustable rate. Rising interest rates are a consequence of the current political instability. This is driving up long-term interest rates, which are based on fixed interest rates.
The average interest rate for a 25-year mortgage is now 4.02%. For 20-year mortgages, it has stabilised at 3.81%. Those opting for an annually adjustable interest rate over 25 years are currently paying an average interest rate of 3.55%.
The vast majority of people are currently choosing a fixed interest rate, but John Romain of Immotheker Finotheker also recommends considering an annually adjustable rate.
“Everyone has to draw up their own budget,” he explains. “But I see only two possibilities: a completely fixed interest rate or a ‘revolving’ mortgage with an annually adjustable interest rate.”
With this type of accordion loan with a guaranteed fixed monthly payment, the monthly payment remains the same, but the term can be extended or shortened depending on interest rate fluctuations.
Immotheker Finotheker advises against variable interest rates every three to five years. “While you are certainly better protected against rising rates, you are less likely to see your monthly payment decrease.”
