Long-term interest rates in Belgium have been dropping since they peaked in mid-June, making borrowing money cheaper, however, despite this sharp fall, banks are hardly cutting rates on mortgage loans.
The ten-year interest rate in Belgium peaked at 2.5% in mid-June but has since fallen sharply as a result of growing concerns regarding an impending recession. It has now been sitting at around 1.5% for at least a week, however, this has not yet translated into lower rates for home loans, according to a survey of home loan brokers conducted by De Tijd.
"We see very little movement in the rates of home loans," John Romain, the CEO of Immotheker Finotheker, one of the brokers that help customers look for the cheapest home loans on the market, said.
Mortgages with a 20-year term for which borrowers pay 20% or more of the purchase price of a home up-front had an average interest rate of 2.7 to 2.8% in recent weeks, according to the interest rate barometer of the credit intermediary. This is up from around 1.5% in February of this year, before the war in Ukraine sent Europe's economy in turmoil.
Banks usually tend to react more slowly to a decrease in interest rates than to an increase, as they want to make sure the interest rate evolution is sustainable, Renaat Acke of Hypotheekwinkel.be, told De Tijd.
Lower rates to come?
Brokers are expecting competition to flare up again in September, which could see rates drop, and are advising clients that can wait to hold out.
"Each bank records a certain volume of savings that they want to convert into home loans. If it appears that the demand for loans is slowing down, action is often taken tomeet that volume. Moreover, the profit margins on home loans have not been exceptionally low for several years, meaning there is room for lower rates," Acke said.
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The high rates for mortgage loans has resulted in the property market cooling off in Belgium, but has also seen younger people rush to buy property out of fear that rates will further rise.
