For a 20-year fixed-term home loan, the average interest rate is now 1.95 percent, according to Immotheker-Finotheker’s calculation. This is also the highest level since 2018. By comparison: even a month ago, the average fixed rate was still fluctuating around 1.40%.
“All rates for all maturities are going up,” said John Roman of Immotheker-Finotheker. He points to higher Belgian long-term interest rates as an explanation. “The 20-year OLO (or linear bond issued by the Belgian state) doubled compared to the beginning of this year, to 1.38 per cent.” The 10-year yield also rose to about 1 percent on Tuesday, the highest level since 2018, in November of 2020, that long-term interest rate was still as low as -0.440%.
More interest also means paying more for the same amount of credit. “If people borrow 200,000 euros today, they are now paying about 1,005 euros a month on average,” explains Imotheker. “With an interest rate of 1.40 per cent, that was 955 euros, or 50 euros less.” Over the entire term, this means a difference of approximately €12,000 in interest payments.
The customer can still avoid a somewhat higher interest rate by choosing a variable interest rate. “Short-term interest rates haven’t risen nearly as sharply,” Roman explains. “For the 3/3/3 formula, you can still borrow at 1.20 to 1.25 percent.” There is a risk that you will have to pay more per month in the future, but this can be avoided by extending the term.
It remains unclear how housing prices will develop if this trend continues.