Even if a “ceiling” appears to have been reached, interest rates remain higher than in the recent past. Yet by using a broker you can secure a price that offsets the difference. Here’s how.
Interest rates: a pause after months of increases
The news was welcomed as it deserved to be. The European Central Bank decided to hold its key rates this autumn. After months of continuous increases, it judged that inflation had returned to a reasonable level. Or, if you prefer, that the situation did not call for going further to force the economies of the old continent to rein in price rises. And it is these rates that directly influence the interest rates set by banks when you borrow to finance a property purchase. But — because there is always a “but” — with the international context still tense (war in Ukraine, continuing rises in energy prices, unrest in the Middle East…), nothing is guaranteed for the months and quarters ahead. For now, you still have to reckon with rates that are broadly higher than in 2022 and above all 2021. Does that mean giving up? Of course not!
Everything is relative
For many economists, the fact that rates had become almost derisory was abnormal. In a sense, they have returned to a logical level. And one that bears no relation to what was common in the final years… of the 20th century! Back then, double-digit rates were a reality… But the environment was not the same, and market prices had not soared. The challenge facing many families who would like to buy a home (house or flat, older or new) has become twofold. Rising rates have been added to a price level utterly unlike that of the early years of the 21st century. And yet that is precisely where a second margin for manoeuvre lies…
Using the price to compensate
What you pay extra through higher interest rates can still be offset by negotiating a lower price. You cannot hold a gun to sellers’ heads, but you can suggest to them — especially if they themselves plan to buy another property using the proceeds of their current sale as their main deposit — that they have everything to gain from showing more flexibility.
Let’s be concrete: for a household borrowing €500,000 over 20 years, the average cost of credit has risen in a year from 2.86% to 3.82%, corresponding to an increase in interest costs from €157,000 to €215,000!
Yet that €58,000 of extra cost can be offset. On properties priced at more than half a million, negotiating the price more shrewdly can wipe out, if not all of that extra cost, then at least a significant part of it.
We are here to help you
As a Japanese stock market proverb has it, trees never grow all the way to the sky. The same goes for interest rates and for house prices… Bankers on one side, sellers on the other, will inevitably come back to their senses. That is why an expert broker is best placed to guide you and bring the discussions to a successful conclusion…
The climate is difficult, certainly, but there is no reason to throw in the towel. Quite the contrary. Do you have a project in mind? We are always available so that our know-how and our networks can help you buy the house, the flat or the commercial premises of your dreams.
