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With the increase in mortgage rates, some can no longer become owners. They then turn to variable rate loans, which are lower, but which can fluctuate.
Near Compiègne (Oise), a couple bought a house for 330,000 euros. They almost couldn’t buy it because the banks wouldn’t give them a loan. They finally managed to borrow 310,000 euros with a variable rate mortgage. Their borrowing rate is thus 1.68% over 300 months. It is however revisable according to the fluctuations of the banking market. The couple could see their borrowing rate go up to 3.68%.
In the event of an increase in the rate, the monthly payments will remain the same, but the duration of the loan could be extended by 60 months, or five years. “It allows many customers today, and especially young people, to be able to become owners”, says Fernand Letertre, broker at Vousfinancer. These variable rates can be dangerous. “If your monthly payment increases significantly, it is important to check, when taking out the loan, that, at the maximum of the monthly loan payment, you will still be able to repay”explains Cécile Roquelaure, Director of Studies at Empruntis.