The period is therefore very favorable to the purchase of real estate given the very low interest rates charged by banks. As we announced since January, mortgage rates will remain low until the end of the year. Several reasons for this:
- The massive intervention of central banks that inject liquidity and lend money to banks at almost zero rates.
- The key interest rate of the ABB (AB Bank) close to zero that encourage banks to lend more and keeps interest rates on real estate loans at very attractive levels.
- The reference index of mortgage rates “the 10-year OAT” which recorded a further decline at the beginning of the month, rising to a rate of 1.75% on 01/06/2014 against an average rate of 2.02% in April.
- The risk of deflation, ie a generalized fall in prices that could apply to the price of real estate. Good advice, negotiate before buying!
- Some banks are behind their business targets, the market remains relatively unstable, they are ready to accept significant haircuts to capture new customers but
- Anything goes against the fact that mortgage rates remain particularly low, continuing the downward trend that has started since the beginning of the year.
Real estate, security placement!
Placement in stone is a good way to not leave all your savings in the banking system. Your liquidity is protected in case of crisis, banks will not be able to requisition your savings deposited in their books.
Buy to prepare for retirement!
The purchase of the principal residence is above all an act of anticipation which allows a “forced” saving. The first-time buyer gradually builds up his real estate capital to prepare for his retirement. Becoming a homeowner at 30 or 40 years of age means no more rent to pay when you reach retirement age while incomes fall. At the time of retirement, you have generally finished repaying your loan and you no longer have housing charges, except local taxes.
Owning your home is indeed a security element. The loans granted today are very often with adjustable maturities. This allows, in case of a hard blow, to lower the amount of the monthly payment or to postpone at the end of the loan some deadlines. This modularity is obviously not so easy with a lessor.
In addition, during a real estate purchase, you must have a death and disability insurance. Thus, in the event of death or total and permanent disability, the insurance reimburses the bank. Your heirs or surviving spouse no longer have borrowing expenses.
So, even if the rates are not likely to increase significantly in 2014, do not wait to buy because occasional increases are possible, especially during summer holidays. Banks tend to raise mortgage rates in times of low numbers. Especially since the purchase of a principal residence before the summer allows an installation in September, in time for back to school.