ECB Raises Key Interest Rates

What are the effects on the lease? After the ECB increased the prime lending rate from 1.0% to 1.25% in the first week of April, movement in the capital market has come. However, future borrowers with foresight may agree a loan because this criterion only delay affects the construction interest development. The European Central Bank (ECB) has responded to the current inflation trends and increased interest rates. This project, which marks the turn of the interest rate, was already expected by observers of the capital market and is a first small step, likely to be followed by more. Already expected for the month of July with a further increase in the federal funds interest rate, which will penetrate in the course of the year on the lease. Although still no rush is currently offered for future borrowers, should yet long-term set a deterioration of the conditions of the construction money and agree on a construction financing in the current year. Who wants to save on interest costs, should take advantage of the moment and a long More than ten years arrange fixed-rate.

In this way protects the future homeowners from a rise in interest rates and benefits from a long-term planning security. Homeowners who are in the interest rate, can currently save the still low level of interest about a forward loan. For security-conscious borrowers, some banks offer even a special right of termination if the rate should fall. The future borrower should abandon the arrange of standard finance, which are equipped with a fixed-rate between five and ten years, being subject to prevent the risk of an increase of the construction loan. By increasing the interest rate set by the European Central Bank, the borrower must reckon with a higher exposure to the monthly interest and instalments, which quickly lead to lopsided financial. Construction projects should therefore no longer be pushed on the backburner, because further rate hike steps a real estate loan is increasingly expensive. Occasional providers of follow-on already offered to back up the currently favourable conditions up to 6 months in advance.

This entry was posted on Sunday, April 3rd, 2016 at 5:26 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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