The forint has weakened these days, and many have watched with concern what it brings to our credit and, if there is a change, how it will affect our lives.
We have not been so frightened by the rise in yields over the past half year! The repayment of our loan is primarily influenced by this change in yield.
Here are some highlights from the last half year that highlight whether we should be afraid of the weakening of the forint.
Forint changes affect our daily lives only within certain limits
The one who travels feels a bit more the price of the trip, the plane, the hotel.
Since foreign currency loans have ceased, we do not need to be afraid of exchange rate changes, as the repayment detail will not be affected.
However, there is one factor that, if changed, will affect our repayment! This is the change in the interest rate on the loan.
This is something that we can influence before we take out a loan, whether we choose a variable or fixed rate loan from a very significant number and quality of loans today.
- At a glance, a floating rate loan may seem cheaper, but after a few months our repayment will definitely change. After the current deep interest rate, it will surely increase.
- fixed loans are predictable, safer, we have to pay a little higher interest rate at first, but as time goes by, you can anticipate floating interest rates
If we asked for a variable rate, we need to know what BUBOR means. The interbank interest rate, which had barely moved in these months, did not change the repayment installment.
For fixed loans, min. The interest rate is fixed for 3 years, it can be for 5 or 10 years, so even if there is an increase in yields, it will not be visible for at least 3 years.
If the fixed interest rate period ends, the bank will also review the interest rate and the interest and repayments will surely increase.
We have no reason to worry yet, but changes are coming
Interest rates have started to rise, and based on our analysis, yields in the government securities market increased by 0.17-1.25% in 2018.
A warning sign is that while short yields have hardly increased or increased, longer yields, which form the basis for fixed-rate loans, have now increased to a greater extent.
In our opinion, short-term yields are disproportionately low over the past six months, while longer-term yields have risen slightly.
The big difference will not persist over a 5 to 10 year period, so short-term returns will rise more strongly than longer-term ones. They will rise higher in the future than longer ones. It seems certain that the interest rates on floating rate loans are ahead of them.
“But it is also logical because in recent years, the environment has favored variable rate loans. The cube, on the other hand, will turn, in favor of fixed loans. Over the past 6 months, yields have increased by 0.6-1.25%, ”the expert said.
This is the reason why over half of those who apply for a home loan choose their loan at a fixed rate.
Today, however, interest rates of up to 3-5 years enjoy popularity, although fixed rates of 10 years and all the time would be truly long-term predictability and security! Compared to the variable, it is already a great success that interest rates can change not every six months but every five years.
Credit institutions have called for the spread of fixed loans. As a result, the repayers did not change when the interest period changed, “banks prefer not to increase the value of the interest and take it back from the interest margin,” the expert explained.
Today’s situation is very favorable for borrowers
- The best deals are available at a 2.5% premium,
- while consumer-friendly home loans have an expectation of 3.5%.
In our opinion, the best deal is a 10-year fixed rate 2% loan
Anyone who is thinking about credit should bring the transaction as soon as possible, because soon we will only get more expensive credit.
If the process accelerates, the rise in yields will be unstoppable, so you need to take action now, who is able and willing to apply for credit with his income and collateral!
Never forget that:
- if the interest rate increases by 1%, the loan repayment rate will increase by 8-9%.
- Let’s not save ourselves by asking for the cheapest and fast-changing loan, but rather choosing a fixed loan that will keep our nights calm.
If you would like to know more about favorable home loans, CSOKs, consumer friendly loans, consult our credit brokerage experts for free professional information!