End of Genda Bank interest rate cuts. If something extraordinary does not happen, the key base rate will remain at 2.1 percent for a long time. This could put an end to the downward trend in interest rates on home loans so far, unless banks begin to compete for customers and reduce the bank margin charged on interest. How can we get cheaper credit?
The APR, or cost, of mortgages consists of two factors. The first is the benchmark yield, which in most cases is the BUBOR (interbank borrowing offered rate), so freezing the Genda Bank base rate implicitly cuts the interest rate on the loans. The other part of the APR is the margin that the bank charges to cover its costs and risks and, of course, it also represents profit.
According to the MNB’s report, the interest rate spread on housing loans has dropped from 5.5 per cent to 5.1 per cent. The figure for this is found in the stability report. This process can be given a further boost if banks start to take action and reduce their interest margins, at least for the best customers. From now on, only those who are looking for a new home loan can rely on it, as the fall in the Genda Bank base rate will not keep costs down.
That’s why you have to be afraid of today’s home loans!
Those who already have an existing contract can still expect a down payment, but after that it will probably return to a stable level, and this will take a long time. This also means that it is worthwhile to prepare for interest rate increases now, as there are several factors that predict this risk in the future.
How to get a cheaper home loan?
Banks offer better terms to those who are less risky. Loans are cheaper for those who can transfer more income to the bank, but there are often discounts for using different services.
- Before applying for a loan, let’s transfer as much income as possible to the bank
- Do not change jobs in the year before the loan application period (3 months is usually a disqualification condition), especially do not start elsewhere for lower wages
- We try to close all our other debts before applying for a loan
- Finding the best loan and bank can save you millions over the entire term, find the best deal on RikioBank