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The development of LIBOR mortgages
In recent years, the LIBOR mortgage has offered the lowest interest rates compared to other mortgage types. In addition, this option is the more transparent mortgage product around. It's an ideal choice for those who want to cut through the small print and advertising talk, letting them understand exactly how interest rates breakdown and what percentage goes toward the bank or mortgage provider. Because of their transparency and lower interest rates, LIBOR mortgages are a much more popular choice than variable rate mortgages. Both mortgage types offer roll-over loans, with interest rates adjusted during the term.
Here you'll get all the information you need when deciding on a LIBOR mortgage and which additional conditions are applied.
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LIBOR mortgages in the past
During the period between 2009 and 2014, interest rates for LIBOR mortgages hovered around the 1.1% mark. Those who have opted for such mortgages could benefit from low interest rates. This is one of the key uses of a LIBOR mortgage, a daily reference rate for money market loan. Due to the stable low LIBOR levels, mortgages in the past could be a hugely beneficial choice for many. However, the risks of LIBOR mortgages is now on the rise and continues to become more of a risk to applicants.
Looking at the past, it becomes clear that interest rates between LIBOR mortgages and other mortgage products can fluctuate wildly. At the beginning of 2015, the difference between 3-month LIBOR mortgages and fixed rate mortgages amounted to only 0.2%, while this rate hovered at 0.7% in February 2014. The smaller the margin, the less it is worth taking the risk of rising interest rates. For a small premium, mortgage holders can secure interest rates in the long term.
The differences between LIBOR mortgages are due to the design of bank-specific interest margins and the manner in which banks pass on the charges of this interest to their customers. While the rate of a LIBOR mortgage is almost always recognised directly, banks have certain freedoms in fixed-rate mortgages and variable mortgages.
Using the MoneyPark Interest Rate Development Tool you can have a look at how LIBOR mortgages and other mortgage types have changed in recent years, helping you make the decision that's best for you and your individual circumstances.
LIBOR mortgages in the future
How such a product as the LIBOR mortgage chances in the future depends wholly on how the Swiss National Bank changes its money market policy. It outputs a band for the 3-month LIBOR. In principle, the National Bank strives to keep its decisions and actions as transparent as possible with clear reasoning. Therefore, financial experts can quite confidently predict trends for certain periods. Experts look at the interim reports of the National Bank and the medium-term forecasts for inflation. The main objective of the National Bank is to ensure price stability and a moderate level of inflation, usually standing at about the 2% mark. However, there is no guarantee as to the specifics of a LIBOR mortgage and its development.
If the interest rates shrink between mortgage forms, this is no guarantee that the banks will adjust their own products to benefit the customer. While the differences between mortgage products have largely decreased, the gap between the cheapest and most expensive mortgage products has widened. The savings potential is correspondingly large. These savings largely arise in the comparison of tenders and the negotiations of securing a mortgage. Money Park helps customers find the ideal offer on the market, with a large network of more than 100 mortgage financiers and backers. Our experts offer independent advice, enabling you to make the best possible decision when deciding on whether a LIBOR mortgage and its inherent risks are right for you.
Current mortgage rates
The displayed interest rates are the best rates currently available. Your personal interest rates may vary depending on LTV, affordability, mortgage amount and the location of the property.