When the interest rate situation is as low as it is today and a number of interest professionals say it is likely to go up to 5% in just a few years, many are tempted to fix the interest rate. This is also something that several bank officials and economists advocate, so it’s easy to just see its benefits and be drawn into their opinions.
Loans with a variable interest rate
But there are also those who go the other way and feel that it is not a place to commit, but that it is better to continue having their loans with a variable 3-month interest rate. One of these is Azanza’s chief economist Claes Hemberg. In an article in Expressen August 9, he lists the benefits but also points out that the most important thing is to compare interest rates. This should be more important than fixing or not fixing the interest rate according to him. The advantage of variable interest rates is that history shows that variable interest rates have been most profitable during most periods. This has been the case for a longer period of time – which loans are usually arranged for.
It is not only at this point that Hemberg goes against the current. Many people recommend that the loans be divided into different parts and tied up for different lengths in order to reduce the risk of getting a high-interest rate on the entire loan. But Hemberg urges the borrowers to instead if the loan is to be tied, bind everything at the same time. The advantage the borrower has with this is that it is easier to negotiate with the banks. Anyone who comes and wants to take out a loan of $ 200,000 can not affect the interest rate as much as if the loan is one million. Accordingly, these two benefits outweigh Hemberg.
Variable rates today
Those who choose variable interest rates today save about one-tenth of a percentage point against borrowing, which makes a big difference on larger loans. Instead, this money should be saved away for future higher interest rates or for one’s own buffer. Alternatively, one will increase the installment of the loan during these times, resulting in lower interest expenses in the future.
But the most important thing, Hemberg believes, is that the customer compares and bargains on their mortgages. Today, the interest rate gap is unusually large, which means that banks have the opportunity to lower their lending rates more than usual. This may not be an argument to raise in the negotiation, but something you should keep in mind when looking for the lowest interest rate.