Forward loan for 09/2024 - accept or wait?

Hello everyone,

In 2013 I took out an annuity loan at 2.95% for 15 years. Since the interest rate policy, ECB, and inflation worry me a bit, I am currently thinking about a forward loan and could repay it after 10 years and 6 months (as of 09/2024). I received the following offer from Interhyp.

Commerzbank
Amount: €300,000
Date: 09/2024
Interest rate: 1.15%
Term: 15 years
Repayment rate: €1,900
Special repayment: 5% p.a.

With this follow-up financing, I have planning security and will finally be at zero afterwards. The repayment rate is also the amount I am currently paying. Special repayments—I’ll see whether I make use of them or invest the money elsewhere. But that is another topic.
I already checked in autumn 2021, back then the conditions were a bit better despite the longer lead time. Back then 0.9x% would have been possible. But at that time, there was no talk of such strong inflation and the ECB, and I postponed the topic.

What do you think? Should I go for it? It probably won’t get much better, right? The last few weeks have certainly been very “dynamic” upwards.
How do you see the trend for construction loan interest rates next year?

Two questions arise for me here:

1.) What upside potential do you have?

2.) What downside risk do you have?

Regarding 1.) In my view, the interest rate can best drop by 0.2 percentage points. (though I see this as quite unlikely)

Regarding 2.) It is not unrealistic that the interest rate will rise by 1 percentage point (or even much more)

In consideration of this trade-off and the current inflation situation, I would accept the offer. Maybe try to explore if there’s anything to be gained by fixing the rate for just 10 years. What big changes could happen there?

Otherwise, accept it!

I have two questions here:

1.) What upside potential do you have?

2.) What downside risk do you have?

Regarding 1.) In my opinion, the interest rate can at best go down by 0.2 percentage points. (But I consider that quite unlikely)

Regarding 2.) It is not unrealistic that the interest rate could go up by 1 percentage point (or even much more)

Considering this trade-off and the current inflation situation, I would accept the offer. Maybe test if there is still room for improvement if you only fix it for 10 years. What big thing could happen?

Otherwise, accept it!

Thanks for the feedback. Primarily, it is important to me to have planning security and to fully amortize. Therefore, 10 years are actually out of the question. I don’t want to have to talk to the bank again in 10 years just because of 0.x%. Even if in the end only a small amount would remain.

My tendency is also to accept.

What I also want to mention: I am currently with VR-Bank. They generally offer forward loans 24 months in advance and don’t even want to talk. But I probably won’t wait the 6 months anymore. Then they just have bad luck.

I'm not 100% familiar with it, but when changing banks, notary fees would have to be paid again. With the same bank, they probably don't apply. However, I guess they wouldn't outweigh the interest advantage/the security.

I'm not 100% sure about that, but when changing banks, notary fees would also be due again. With the same bank, they probably are not due. However, I estimate that this would not outweigh the interest advantage/the security.

Correct, a land charge assignment takes place, which is possible without a notary, and therefore the fees of a few hundred euros remain very low.

The interest rate is amazing! Sign it. Why? Because the bank doesn't earn anything more on this financing. We wouldn't offer our house like this either, since we also want to make money. If you subtract the forward premium, you end up (or would end up if you closed today with immediate payout) with an interest rate of about 0.6-0.65% for a 15-year fixed interest period.