Offset borrowing costs by negotiating good prices

Even if they seem to have reached a "ceiling", interest rates remain higher than in the recent past. Even so, by using a broker, you can secure a cost saving that makes up for the difference. Let us explain...

The news has been well received. The European Central Bank has decided to maintain its key interest rates this autumn. After months of continuous rises, it has considered the inflation rate to be back to a reasonable level. Or if you prefer, that things did not need to be taken any further to force the economies of the Old Continent to curb rising prices. And these are the rates that directly affect those set by banks on property loans. But, because there always is a "but", the tense international situation (think war in Ukraine, continuing rises in energy prices, conflict in the Middle East, to name but three) means that there is nothing set in stone for the months and quarters to come. For now, it is a case of dealing with interest rates that are overall higher than in 2022 and especially 2021. Does that mean admitting defeat? Nothing of the sort!

A good number of economists took the view that interest rates falling so low as to be almost derisory was an anomaly. And from a certain perspective, they have returned to a sensible level. And far removed from what was commonplace in the latter years...of the 20th century! Rates were in two figures at that time, but the environment was quite different and property prices had not soared. Many families looking to buy a home (house or apartment, old or new) now face a dual challenge. The rise in rates has come on top of property prices that bear no resemblance to what they were at the start of the 21st century. However, therein lies a second margin of manoeuvre…

It is always possible to compensate for high interest rates by negotiating lower purchase prices. You can't hold a gun to vendors' heads, but equally, you can suggest to them – especially if they a looking to buy themselves and use the proceeds of their sale to make a major contribution to their purchase – that they have everything to gain by showing more flexibility. To take a specific example, for a family borrowing €500,000 over 20 years, the average interest rate on their mortgage has in one year increased from 2.86% to 3.82%, corresponding to an increase in interest costs from €157,000 to €215,000.

And yet, it is possible to compensate for this €58,000 increase. On a property with an asking price of something over half a million euros, more-effective haggling can erase all or a good proportion of this extra cost.

As the Japanese stock-market maxim says, trees do not grow to the sky. And the same applies to interest rates and house prices. Both bankers and sellers will have no choice but to see sense. And that is why an expert broker is the best-placed person to help you through to a successful purchase at the right price.

There can be no doubt that we are living through difficult times, but that is no reason to throw in the towel. Quite the contrary, in fact! Are you thinking of buying? We are always available to put our know-how and networks to use to help you buy the house, apartment or business premises you've always dreamt of.

You are looking for tailor-made advice and support from financial professionals, you want to save time... we take care of all the steps for you to carry out your project in the best market conditions. Send us your request with a few clicks and we will take care of the rest!