long, variable rates have been shunned, being afraid if the credit rate were to rise. Today, this risk is limited, most variable rates are accompanied by bumpers. But fixed rates also have their strengths. In the long term, we must compare.
FIXED RATE
Its greatest merit is its simplicity and readability.
Its rate depends on the level of interest rates in the long term, generally the 10-year OAT (5.36%) on which banks are refinanced. The rise, decline or stability of these long-term rates affect fixed rate.
A rate based on your banking situation
Currently, fixed rates vary between 4.60% and 6.40% (excluding fees and insurance). Obviously, the "good" client will grant the best rate, substantially the same as that of a floating rate loan.
If your profile is more risky, you will be afflicted with the highest rates and reduced borrowing capacity. Orient yourself then to a floating rate loan.
Advantages and disadvantages of the fixed rate
The fixed rate is the readability of repayments for the duration of the loan. The rate, duration and amount of each monthly payment is constant. No surprise
possible, not even benefit from a better rate if the bank operates in a climate more favorable.
The monthly rate progressive: a prorated refund to your changing income
But if you expect a positive evolution of your income, you can take a fixed rate loan and monthly progressives.
rate does not move during the duration of the loan, but monthly payments are under increasing fixed in advance: every 5 years, for example, the monthly payment can increase by 3%.
Thus, timing of first monthly payments are lighter and last longer heavy, based on the evolution of your career. But while the challenge is there.
The floating rate on the rise
The floating rate loan is in France for 10 years. During this decade, banks have used their expertise to invent new formulas can capture the interest of purchasers.
They seem to have succeeded because, nowadays, the variable rate on the rise.
Especially as many safety interlocks prevent rates soar if it were to go back. And that rate is lower by about 1 percentage point than the fixed rate.
A multiplicity of rates
There are many different formulas, based on indices or baskets of multiple indices. Some clues are known in banking parlance "volatile" in that they can change drastically: the case of EURIBOR (European Interbank Offered Rate), published by the Bank of France. Others are more or less sensitive to movements in the money market while also reflecting the underlying trends such as the rate of the Livret A or bond rate.
Four families of variable rate loan are available:
- The loan "capped" when the rate ceiling
is fixed from the outset to limit the rise. It can decrease depending on the index, but not at any time.
- The loan "double cap":
where changes are propagated upward or downward by about 3 points.
- A loan where the monthly payments remain fixed
but where the duration can be lengthened or shortened.
- A loan where, if lower, the duration is shortened and in case of increase, plus the monthly
can not increase by more than 80% of the INSEE.
The floating rate loan into a fixed rate can go at any time, or when the anniversary date of the loan. This passage is irrevocable.
Its greatest merit is its simplicity and readability.
Its rate depends on the level of interest rates in the long term, generally the 10-year OAT (5.36%) on which banks are refinanced. The rise, decline or stability of these long-term rates affect fixed rate.
A rate based on your banking situation
Currently, fixed rates vary between 4.60% and 6.40% (excluding fees and insurance). Obviously, the "good" client will grant the best rate, substantially the same as that of a floating rate loan.
If your profile is more risky, you will be afflicted with the highest rates and reduced borrowing capacity. Orient yourself then to a floating rate loan.
Advantages and disadvantages of the fixed rate
The fixed rate is the readability of repayments for the duration of the loan. The rate, duration and amount of each monthly payment is constant. No surprise
possible, not even benefit from a better rate if the bank operates in a climate more favorable.
The monthly rate progressive: a prorated refund to your changing income
But if you expect a positive evolution of your income, you can take a fixed rate loan and monthly progressives.
rate does not move during the duration of the loan, but monthly payments are under increasing fixed in advance: every 5 years, for example, the monthly payment can increase by 3%.
Thus, timing of first monthly payments are lighter and last longer heavy, based on the evolution of your career. But while the challenge is there.
The floating rate on the rise
The floating rate loan is in France for 10 years. During this decade, banks have used their expertise to invent new formulas can capture the interest of purchasers.
They seem to have succeeded because, nowadays, the variable rate on the rise.
Especially as many safety interlocks prevent rates soar if it were to go back. And that rate is lower by about 1 percentage point than the fixed rate.
A multiplicity of rates
There are many different formulas, based on indices or baskets of multiple indices. Some clues are known in banking parlance "volatile" in that they can change drastically: the case of EURIBOR (European Interbank Offered Rate), published by the Bank of France. Others are more or less sensitive to movements in the money market while also reflecting the underlying trends such as the rate of the Livret A or bond rate.
Four families of variable rate loan are available:
- The loan "capped" when the rate ceiling
is fixed from the outset to limit the rise. It can decrease depending on the index, but not at any time.
- The loan "double cap":
where changes are propagated upward or downward by about 3 points.
- A loan where the monthly payments remain fixed
but where the duration can be lengthened or shortened.
- A loan where, if lower, the duration is shortened and in case of increase, plus the monthly
can not increase by more than 80% of the INSEE.
The floating rate loan into a fixed rate can go at any time, or when the anniversary date of the loan. This passage is irrevocable.
(sources Paruvendu.fr)
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