with the drop in rates, should you renegotiate your credit?

Interest rates are falling. Is now the right time to renegotiate your home loan?

After two years of increases for borrowing and purchasing real estate, interest rates have fallen sustainably over the past year, to around 3.55% for a 20-year loan. Is it a good time to lower your loan terms? Advice from Fanny Guinochet.

franceinfo: Should you go see your banker or broker now to try to review the rate and make money?

Fanny Guinochet: It’s tempting, with loans over 20 years, which are on average,at 3.55%, while at the end of 2023, we were more around 4.3.

GBasically, we consider that renegotiating your credit is only worth it if you have a gap of 0.7 to 1 point between the current rates and the one you previously obtained for your loan. Because otherwise, as there are costs, credit redemption, files, early repayment compensation (IRA) and guarantee costs for the new loan, so it is not necessarily interesting.

Furthermore, we consider that you must be in the first half of the loan repayment, because it is in this half that you pay the most interest, to the detriment of the amortization of the capital, for it to be interesting. So for loans taken out in 2023 or early 2024 this is the case, it’s a possibility.

Can everyone renegotiate?

In fact it depends on the conditions of your loan. And he There are two options: either you stay with the same bank, or you have your loan purchased by another establishment.

At the moment, banks are trying to attract customers and are rather open, but be careful, it depends a lot on your profile: banks only accept renegotiations or repurchase of loans for borrowers who present solid guarantees. So it’s up to you to present your best profile.

How to proceed?

The best is first to request a commercial gesture from the bank which granted you your initial loan, nparticularly on the application fees which are always negotiable. MBut to convince the banker, you need arguments: for example, promising to repatriate savings to your bank.

Often, the repurchase of credit also allows you to have better rate conditions than with simple renegotiation. But the operation is also often more expensive. Because in addition to the processing fees, you will have to pay early redemption compensation. Without forgetting sometimes the mortgage costs that you may have on the property financed on credit.

So before getting started, you really need to look at all the costs, and see if it’s not worth the wait a little. Professionals are betting on rates of 3% next year.