As interest rates decline, experts recommend securing a fixed or mixed mortgage ahead of 2025, with a notable 51.3% surge in property sales marking the highest activity since 2007. Mathias Pleissner from Scope Ratings urges homeowners to consider switching from variable to fixed-rate mortgages before the December 31, 2024 deadline, which waives fees for such changes due to a government-banking agreement. Homeowners can transition their variable mortgage to a fixed one through a process called novation, avoiding typical fees and perhaps saving up to €1,500 on a €150,000 mortgage. alternatively, subrogating the loan to a different bank can also yield better terms without incurring the usual 2% fee if completed by the end of the year, making it a financially savvy move for many.
Tags: Real Estate Market, Mortgages
Q&A with Mathias Pleissner on Mortgage Trends and Opportunities Ahead of 2025
Time.news Editor (TNE): Welcome, Mathias Pleissner from Scope Ratings! With interest rates on the decline, many are curious about the best mortgage strategies moving forward. Can you share why now is an opportune time for homeowners?
Mathias Pleissner (MP): Absolutely! The decline in interest rates presents a unique opportunity for homeowners, particularly those with variable-rate mortgages. Our recent analyses show a significant 51.3% increase in property sales, indicating the highest market activity since 2007. This suggests that buyers are actively looking too capitalize on lower rates, making it a perfect time for current homeowners to secure fixed or mixed-rate mortgages before potential rate changes in 2025.
TNE: you mentioned homeowners considering a switch from variable to fixed-rate mortgages. What should they know about this transition?
MP: It’s crucial for homeowners to act swiftly. There’s a government-banking agreement that waives fees for switching from variable to fixed-rate mortgages until December 31, 2024. This not only alleviates financial pressure but also enables homeowners to lock in lower rates and stabilize their monthly payments. Through a process called novation, they can avoid standard fees, plus possibly save up to €1,500 on a €150,000 mortgage.It’s a significant financial advantage.
TNE: That sounds beneficial.Can you explain the novation process for our readers?
MP: Certainly! Novation is essentially the process of replacing an old contract with a new one, which in this case is transitioning to a fixed-rate mortgage. This method simplifies the switch without incurring the usual fees that lenders might charge for modifying loan terms. It’s an intricate yet advantageous option for many current homeowners looking to make the most of the current market conditions.
TNE: What about those who are considering shifting their loan to a different bank? How does that process work?
MP: Great question! Homeowners can opt for subrogation—a process that allows them to transfer their existing mortgage to another lender for potentially better terms.The notable aspect here is that if completed by the end of the year, they could bypass the typical 2% fee that often comes with changing banks. This can lead to significant savings, making it a strategically wise decision for many looking to improve their mortgage terms.
TNE: With all these changes, what practical advice woudl you give to homeowners contemplating their mortgage options?
MP: I recommend that homeowners review their current mortgage situation promptly. calculate potential savings by transitioning to a fixed-rate mortgage or considering subrogation. Engage with financial advisors or lenders to understand the implications of these transitions on your long-term financial strategy,especially since we are operating within a window of opportunity that allows for fee-free changes until the end of this year. The time to act is now, particularly as we head into 2025 when market conditions may shift again.
TNE: Thank you, Mathias, for these valuable insights. It’s clear that homeowners have a substantial opportunity to enhance their financial standing by making informed decisions about their mortgages before the upcoming deadline.
MP: Thank you for having me! It’s a critical time for homeowners to secure favorable terms and ensure they’re making the wisest financial choices moving forward.