In Luxembourg, the borrower can traditionally choose between two interest rates: fixed or variable. In the past, the variable rate was very popular with Luxembourgers, while French-speaking countries preferred the fixed rate. Since the fall in interest rates, the trend has been balanced and even reversed if one considers the volume of loans granted. But could variable interest rates be a solution in the current situation? "It's hard to say", explains Georges SPANIER, founder of CREDITSIMMO.LU. "We believe that a sharp rise in rates would be detrimental to both the borrower and the bank. Due to the current socio-political developments, customers are worried and are looking for both security and flexibility, as no one can predict how the rate structure will develop and when the peak will be reached. As is well known, economic factors play a decisive role here.
"At our meeting at the bank, we were told that our salaries did not inspire "confidence" (...) However, we both earn between 80 and 85,000 euros per year. Our credit was not approved. (Christine, office administrator)
We hear these and other stories every day. Our mission is to advise our clients as neutrally as possible and above all competently, so that the dream of becoming a homeowner does not turn into a nightmare. There are, however, other options available to the prospective borrower. For example, a mixture of the two known rates: a fixed interest rate, but renegotiated at a given time and according to the market.
Christine and her husband Gérôme are buying a flat in Luxembourg. She, an office administrator, and he, a mechatronics engineer in a start-up, had to fight to get it. "We had the impression that they didn't want to help us get a loan because our salaries were not 'reassuring' according to the banker," the 33-year-old tells us. "However, we both earn between 80,000 and 85,000 euros a year, and at CREDITSIMMO.LU they finally managed to find us a fixed-rate loan that can be reviewed every five years, which will allow us to change direction in five years."
"Indeed, a 5-year fixed rate allows you to gain peace of mind with regard to the constant rise in rates at present.
In economics, we are well aware that this wave effect is cyclical and we can reasonably expect a return to normal within a period shorter than the period of securing your rate.
This opportunity will allow you to review your loan strategy without any constraints," explains Alain Fuhrmann, a mortgage expert at CREDITSIMMO.LU.