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Fixed rates make sense | eKathimerini.com

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Borrowers are rushing in droves to change their mortgages to fixed interest rates, as 95% of new mortgages now carry unchanged rates for up to 20 years.

The prospect of rate hikes has also mobilized borrowers, primarily those with floating rate mortgages who took out their home loans after 2004. Kathimerini understands that these people are going back to their banks asking that their interest rates be replaced by fixed rates.

Banks are also bracing for fixed rate changes ahead of the European Central Bank’s benchmark rate hike; some lenders have already made small changes to their rates as they realize that their current levels are not sustainable due to the rising cost of money.

According to figures from Greek banks, the average fixed interest rate over 10 years is close to 3%, and that over 20 years is 3.5%; however, bank officials explain that this level is just at the break-even point, meaning lenders are marginally covering their costs.

Mortgage officials say fixed rates are currently a window of opportunity for those who want to get an interest rate at a particularly low level for a long period of time, because according to projections, the increase has been taken for granted. and could reach 1 percentage point by the end of the year.

Borrowers with past loans will need to consider when the loan agreement was signed and if they are close to when their arrears will be primarily interest and not the original principal. The transition to a fixed rate can be done without penalty and borrowers only have to pay a processing fee of 200 euros.

Since during the financial crisis of the 2010s, demand for mortgages was minimal, most of the loans that banks currently have in their portfolios were issued between 2002 and 2009, when interest spreads were low and did not exceed not 2%; the passage of the Euribor rate into negative territory offered these borrowers preferential floating rates, but this is no longer the case.