Whoever has a loan knows what a burden this has on the family budget! They don’t want to hear about a higher monthly repayment, which would make their loans safer and more transparent!
Hungarian creditors have already experienced a rise in interest rates, and even here the fall of foreign currency loans is alive.
For every homeowner, we recommend that you opt for a new, payable and secure credit facility instead of paying off, to help you calm down your day to day, anticipate your interest for a fixed period of time!
What do homeowners need to know?
In 2008, homeowners got into a financial crisis and the reason for this was that most of the loans outstanding at that time were floating rate loans, and the rise in interest rates almost blew up the repayers, which rose dramatically. There was another reason, the weakening of the forint against the Swiss franc, which led to a brutal increase in floating interest rates, which in many cases doubled the monthly installments.
Based on a home loan issued in early 2007, we can clearly see an increase in the installment payment
• In 2009, 44% was due to interest rate increases and
• 56% depreciation of the forint.
The weakening of the Forint caused a further change, with the effect of interest rate increases falling to 20-25%.
The 20-year Swiss franc-based home loan repayment of $ 10 million taken in January 2007 could jump from $ 10,000 to $ 60,000 a month! It is clear that the impact of interest rate increases is significant, with 20% more paid 2 years after the loan was taken out and doubled in 2009 due to the weakening of the forint and changes in interest rates.
And that’s what the population has learned, with more and more of today’s loans, nearly 70% of which are loans with a minimum 10-year fixed rate and a 10-year term.
For borrowers, security is important, and the effects of these changes can be felt much later in these loans with long interest rates and fixed interest rates. Today’s loan applicants know, have learned, feel.
Home mortgage lenders do not understand
Do not want to pay more than today’s mortgage. “If I pay $ 54,000 a month now, then it is unacceptable for them to pay $ 58,000 in the future.”
Of course, it should also be remembered that among these former foreign currency borrowers there are many who slipped through the repayment installment during the “rough period” because they could not track the sudden rise in the BAR list. Over time, once they have been able to restore their ability to pay and re-pay their installments without problems, the banks will not be partners in the interest rate adjustment – saying that this transaction requires the customer to be reclassified, and whoever is barred is not creditworthy. Unfortunately for them, there is no solution other than partial or final repayment.
The chart below illustrates how a 1-2-3% interest rate increase will increase the monthly repayment installment for different maturities. Important: it is not the original maturity of our existing home loan, but the remaining maturity that matters! To put one specific example: If we have a variable rate home loan with a 20-year remaining maturity, with an interest rate increase of 3%, our monthly installment will be 29% higher. Today, 60% of previously taken out (still to be repaid) home loans have variable interest rates, so this risk is very significant.
How much will our repayment rate increase in case of an interest rate increase of 1,2,3%!
With a 1% interest rate increase, a 7-11% increase is expected,
2% to 15-23%,
In case of a 3% interest rate increase, our repayment term may increase to 22-36% depending on the remaining term.
It is expected that the credit will be truly triggered when the first interest rate increase occurs. The mass redemption of previously taken home loans will be current when interest rates rise, which will delay the repayment installment. This is when homeowners realize that the age of secure long-term fixed-rate loans has come!
By then, a more expensive version will become available, with a 10-15 year fixed rate home loan.
Losing interest rates at historical lows will deprive not only a small percentage of today’s variable-rate mortgage lenders of their irreversible potential!
We want to encourage everyone to take advantage of the rarely seen opportunities, to change interest periods as long as you can safely!
Choosing the Loan is the right solution! Interest!
If you have a home business, would like to take out a home loan, are interested in your options, or you may have been interested in CSOK changes, call our credit broker to help you make a professional decision!
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