Innsbruck/Vienna (OTS) – In particular, the variable interest rates for housing loans rose by around 0.5 percentage points over the second quarter of 2023, in line with two further interest rate hikes by the ECB. In a year-on-year comparison, the nominal increase was almost 3.8 percentage points and the effective monthly rate for a real estate loan of EUR 100,000 with a term of 25 years rose by EUR 201.50 to EUR 589.82, i.e. by EUR 2,418 annually. And due to wage inflation risks and stubborn core inflation, there is a risk of further interest rate increases in the euro zone.
A fifth of economic output in interest rate risk
It is all the more astonishing that in an environment of sharply rising interest rates within the volume of newly concluded housing construction loans, the proportion of loans with variable interest rates is increasing, from 38.1% in the negative interest year 2021 to 57.5% in the first quarter of 2023. The housing construction experts from Infina estimate that a real estate loan volume of private households in the amount of 70 to 90 billion euros or up to more than 20% of GDP has variable interest rates. Many young families in particular have now reached the limits of their resilience. Further rises in interest rates would result in increased loan defaults and foreclosures. This high volume of unsecured credit thus harbors a great risk potential, which can still be counteracted quickly by means of debt restructuring, especially over longer terms.
Secure interest rates over the long term and save on interest costs
Interest rates at the long end rose much less strongly, since the markets are already pricing in falling interest rates from the course of the coming year. An economic downturn and declining inflation rates are fueling these expectations.
The result: According to the average values of the IKI on July 3, 2023, there were nominal interest rates of 4.762% for variable interest loans (on a 3-month Euribor basis), 4.125% for ten-year and 4.025% for 20-year fixed interest rates. This is a market anomaly. Normally, borrowers for fixed interest rates for 10 to 30 years have to accept higher interest rates than for variable interest loans. At the moment, however, it is the other way around and there are significant debt restructuring opportunities on the market with the possibility of reducing the installment burden at the same time:
Anyone currently paying 4.75% pa variable nominal interest can, under certain conditions, even convert their debt into a 20-year fixed interest rate at 3.75% pa. In the case of a flat rate loan with a term of 25 years, this one percentage point per year can generate savings of up to more than 50,000 euros nominally and simply calculated over the entire term with a loan amount of 300,000 euros. Seen over a year, the maximum possible penalty for debt restructuring would have already been paid off.
Attention: This constellation is only temporary and can be over again within a few weeks. A first important date in this regard is the next ECB Council meeting on July 27th. In this, the ECB decides on the next interest rate hike or an interim pause in interest rate hikes.
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About Infina
Infina is an independent, Austria-wide consulting company and operator of the leading omnichannel platform for real estate financing Profin. Customers and partners benefit from the size of the company on the market and the claim to find the right financing for every customer.
The credit platform developed in-house is already used by more than 500 sales partners who have access to over 430 credit products from Austrian and German banks. With its own sales organization, Infina is represented as a housing finance expert more than 100 times throughout Austria. Founded in 2001, the company currently successfully arranges financing for over 120 banks and building societies.
By digitizing the processes in Profin, Infina actively contributes to technological change and offers the most modern form of network cooperation for partners. With the introduction of the end-to-end process, all parties involved in a transaction were involved. Infina thus offers an integrated business model that digitally connects experts for services related to the purchase of real estate. With a new business volume of more than 1.6 billion euros in 2022, Infina is the market leader in the free and digital brokerage of private real estate financing in Austria.
Infina Credit INDEX (IKI) in full
Questions & contact:
INFINA Credit Broker GmbH
Hagen Luckert
hagen.lucker@infina.at
www.infina.at
2023-07-19 06:54:15
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