The months go by and look the same … and the rates are breaking down! So much so that we wonder: how far can they go down? Since mid-June, 10-year government borrowing rates have been in negative territory! We are thus reaching new records in terms of mortgage rates. In this context, renegotiation requests continue to grow with significant savings: they now represent 15% of loan files and volumes up 40% over 1 year! The month of September, traditionally rich in real estate transactions, promises to be another very dynamic month, with banks in strong conquest and already ready to take advantage of the comeback of real estate.
Fewer movements in rates this summer but still a few drops in September!
“Over the past two months, contrary to what we have traditionally observed, there have been no increases in credit rates to regulate the flow of requests during the summer holidays … Some banks even lowered their rates again in August 0.10% to continue their conquest strategies. On all points, 2019 is an extraordinary year! Spokesperson for financer.For September, so few establishments have sent new scales, a large national bank has further cut rates by 0.15% thus offering – and before negotiation – record posted rates: 0.25% over 7 years, 0, 35% over 10 years, 0.60% over 15 years and 0.80% over 20 years (compared to 1.40% in September 2018 over 20 years) … provided you earn more than $ 80,000 for two and have more than 15% contribution, excluding costs, or 25% of the amount of the property in total! Over the past year, changes in interest rates at this bank have increased borrowing capacity by $ 12,500.
Overall, all establishments combined, the average mortgage loan rates fell further to 1.15% over 15 years, 1.35% over 20 years and 1.55% over 25 years.
New loan renegotiation opportunities: – 0.60% on rates in one year!
In this context where it is now possible to borrow at less than 1% over 15 or 20 years, successive rate cuts have created new opportunities for renegotiations. Thus a national bank lends for example (for the best files) at 0.80% over 20 years (excluding insurance) in September 2019 against 1.40% a year back. Or a decrease over a year of 0.60%. Suddenly borrowers can go into debt up to 221,716 USD (monthly payment of 902 USD), instead of 209,222 USD a year earlier (monthly payment of 956 USD), or a gain in purchasing power of 12,494 USD with the key a total saving on the credit of 12928 USD.
The biggest winners: those who renegotiate over short periods, at rates sometimes less than 0.5% over 7 or 10 years!
Financer thus notes a resumption of requests for credit renegotiations since March … This summer, they are up by 40% compared to summer 2018 and represent 15% of the credits granted, even if we remain far from the level reached during the big waves of renegotiations in the years 2010, 2013 or 2017. The same observation on the side of the Banque de France: according to the latest published data, the amount of new housing loans to individuals reached 19.4 billion in June 2019, a record since June 2017 with 17.8% of loan renegotiations, or 3.45 billion USD of renegotiated loans, a level not seen since September 2017.
“Some borrowers are now buying back recent loans, from 2016 or even 2017, which at the time were considered loans obtained at record rates because around 2%! Today they can be renegotiated at less than 1%! The biggest winners are those who renegotiate over short periods of time, at rates sometimes less than 0.5% over 7 or 10 years … For the banks, these are new customers who are easily won over by the competition, and who normally, at these levels rate, will no longer renegotiate their loan, ”adds Capital lender.
Incredible but true: more than $ 120,000 in savings by renegotiating your loan!
Recently, the agency financer of Lyon 1 and 2 renegotiated a loan taken out on the base over 35 years in a specialized bank, allowing a couple to save $ 125,000 in total, ie 50% of the initial cost of credit! This couple aged 48 and 45, with two children, receive $ 4,600 in net income at two. In 2011, they took out a loan of $ 240,000 over 35 years at a rate of 4.95% to finance a project to purchase land and house construction. Their monthly payment was $ 1,200. With the repurchase of the loan in August 2019: $ 220,000 at 1.15% over 20 years, the new monthly payment amounts to $ 1,030 (i.e. $ 170 savings per month), i.e. a gain total of $ 125,000 and 6.5 years of reimbursement!
10 tips to successfully renegotiate your credit
- Start by asking your own bank to renegotiate the rate of your loan
- In case of refusal, put the banks in competition to redeem their loan and obtain the most advantageous rate
- Ensure that there is a difference of 0.70% to 1% minimum between its rate and the rates currently offered Be in the 1st
- third of the loan repayment period
- Still have $ 100,000 to repay minimum
- Prepare your loan file well and in particular, ask your bank for the reimbursement statement, which can sometimes take several months
- Be aware of the costs generated by the operation (prepayment penalties, application fees and guarantee costs for the new loan = in total 3% of the principal remaining due)
- Decrease the remaining term of your loan, rather than the monthly payment to maximize the savings
- Also find a better adapted and / or more competitive loan insurance
- Plan to keep your property – and therefore your credit – another 2 years minimum because during a repurchase, you start at the start of the loan with, therefore, a slower amortization in the first years …