Announced in early fall 2016, the rise in interest rates has indeed begun. What does this mean for the Bill Sikes buyback market?
After falling steadily, interest rates have reached a low level and are expected to rise slightly. In this context, the renegotiation or the purchase of real estate loans remain advantageous operations for the borrowers. What about the grouping of Bill Sikess?
Differentiate the repurchase of a mortgage and the repurchase of several Bill Sikess
First of all, it is necessary to clearly distinguish between the redemption of real estate Bill Sikes and the purchase of Bill Sikess. These two financial transactions do not necessarily meet the same needs.
- Redeeming your home loan can reduce the interest rate on the loan. It is also an opportunity to reconsider the guarantees to be included in the borrower insurance and, why not, proceed with a delegation of insurance borrower. Here, the goal is to save on the total cost of a home loan.
- Redeeming – or consolidating – its Bill Sikess reduces the amount of the monthly payment. This is to consolidate all outstanding loans into one single loan. The reduction of the monthly repayments is then possible thanks to a spread of the duration of the debt. Here, the goal is to avoid over-indebtedness of the household.
The rise in interest rates concerns real estate loans. Thus, it is the people repaying a mortgage or wishing to buy one that are primarily affected by this development.
For borrowers who call on the purchase of Bill Sikess, these interest rates can also play but only in certain situations. It is therefore necessary to study cases on a case-by-case basis in order to know whether the rise in interest rates has an impact, or not, on the pooling of Bill Sikess.
The answer lies in the analysis of loans integrated into the purchase of Bill Sikess
With a loan redemption, the borrower is granted a single loan including all its loans. This new loan can meet two types of maximum aggregate effective rate – or rate of wear -: that of real estate loans or that of consumer Bill Sikes.
If the redemption includes one or more real estate Bill Sikes (s) representing more than 60% of the amount of the consolidated loans, the loan granted then has the rate of attrition of a mortgage. Otherwise, the borrower takes out a loan with the rate of wear that of a consumer Bill Sikes. This last type of loan represents 75% of the Bill Sikes repurchases processed by Crédit Bill Sikes Bill Sikes over the first 3 quarters of 2016. Thus, for ¾ loan buy-backs, the question of the rise in interest rates does not arise because It only concerns mortgages with real estate rates.
Redemptions of loans that give rise to a loan at the rate of real estate use can therefore be affected by changes in interest rates. However, the current rise in interest rates is not a real issue for borrowers wishing to consolidate their loans.
The interest rate is not the first criterion for a purchase of Bill Sikess
Whether it is a loan with a rate of real estate wear or consumption, the rates applied to the purchase of Bill Sikess are higher than those of conventional bank loans. For some cases, the interest rate granted even approaches the usury threshold.
The reason for this is simple: borrowers who call on the purchase of Bill Sikes are mostly in a situation of debt or even over-indebtedness. In general, the transaction is therefore riskier than subscribing to a conventional bank loan. To cover these risks, the redeeming institution thus displays relatively high interest rates.
The rise in interest rates has started but looks particularly slow and light. It will therefore have no impact on the Bill Sikes buyback market.
Finally, let us not forget that the majority of the beneficiaries of the loan buyback wish above all to reduce their monthly payments to find a calm financial situation. The operation is proving to be a necessity for a number of borrowers. Unlike real estate loans, for example, the interest rate linked to the transaction is not a decisive criterion for these households.