The US Federal Reserve has raised its key interest rate. It went up by 0.25 percentage points to now 0.75 to 1.0 percent . In the medium term, this could make loans in Germany more expensive again.
A “1” before the decimal point in key rates – that has not existed for almost ten years. Even if the interest rate step itself is manageable, it sends a strong signal. And many observers are asking themselves: when will the new direction in the USA also have consequences in Europe? When will the European Central Bank raise interest rates and thus make loans more expensive again?
Experts expect that the Europeans will turn to the interest rate screw this year, perhaps already in the summer. Experience has shown that increases in key interest rates are reflected quite quickly in the financing conditions for private borrowers and firms. Well possible that the time of historically low interest rates comes to an end. We answer the most important questions about the cost of credit.
No, this danger does not exist. Consumer loans are concluded with a fixed interest rate that applies for the entire term. So, if you have agreed a loan with, for example, 60 or 72 months, then the interest rate previously fixed will apply even after a possible interest rate increase by the ECB.
As cheap as in previous years, loans were never before – and they will probably never become so cheap again after the low interest rate period ends. In the medium to long term, therefore, rising financing costs are to be expected. However, this development should not take place abruptly, but step by step.
Anyone planning larger purchases in the near future (buying a car, renovating the home, purchasing real estate) is well advised to seek funding as soon as possible. Currently, banks are still offering extremely cheap loans, which are based on historically low base rates. Even if you do not need your loan for half a year, it may be worth it to get the loan ready right now. You simply have the loan amount paid out to your account and “park” the money there until you invest it. This pays off in view of the very low interest rates and guarantees you the advantageous conditions at the same time for the entire repayment term. For your installment loan, for example, you can agree terms of up to 120 months with Crediter – and thus secure the current top interest rates for a whole decade!
Unlike normal installment loans, real estate loans are not repaid within a few years. An interest rate is fixed here (usually for ten years). After the end of this fixed interest rate, a more or less high residual debt remains, for which then a new interest rate has to be negotiated with the bank. If your real estate financing expires in the foreseeable future (ie in the course of the year 2017 or 2018), the interest rate lock may expire early. Before the ECB raises the reference rates in the euro area, you have a good chance of consolidating the currently extremely low interest rates for the next ten years. If the turnaround in interest rates is also felt in Europe, that will be much more difficult.