Forward loan from November 2026 now

The "expert" asks the clueless builder. :D

Well, to estimate something like that you really need a crystal ball!

Or do you think I know what the interest rates will be in 6 months? or in 12 months?

If I knew that exactly, I wouldn’t be here in the forum, but somewhere in the South Seas, occasionally making a few trades (in December shorting Bund futures.... with a 3-month term.... you could multiply your capital many times over with good leverage...)

Or what should I say? At the beginning of the year, I exchanged views with an economist from a big bank, his opinion was that interest rates would be at 3% by the end of the year.... but we are already close to that... and will the 3% be reached by the end of the year? or earlier? And then will we be at 3.5% or 2.50%?

As I said, the current trend is upwards

Maybe that says more to you?


PS. That’s why the question what the client expects... if he believes that interest rates will only rise by 0.75% in 4 years, then he can wait... if he believes it will rise more, then he should do a forward now.
I no longer make forecasts... because then I’m the one to blame if it turns out differently ;)

We are in a similar situation. actually, I didn’t want to conclude a forward contract because we can only repay the main loan in 2026, but we also wouldn’t have to since it runs for 15 years and only 10 will have passed in 2026. Our financing advisor then proactively approached us, and I had an offer calculated: 1.9x% for 10 years. sounded not as bad as expected, so we decided to lock in the follow-up financing already. since we lacked the time to deal with it at short notice, we postponed the whole matter by three/four weeks and took care of it during the Easter holiday. as a result, the offer now stands at 2.6x%. Annoying, but nothing to be done about it. We have now applied and are currently waiting for the loan approval.

We are in a similar situation. Actually, I didn’t want to conclude a forward deal, since we can only repay the main loan in 2026, but we also wouldn’t have to, as it runs for 15 years and only 10 will have passed by 2026. Our financing advisor then proactively approached us and I had an offer calculated: 1.9x% for 10 years. It didn’t sound as bad as expected, so we decided to fix the follow-up financing after all. Since we lacked the time to take care of it at short notice, we postponed the whole topic by three/four weeks and dealt with it during the Easter vacation. As a result, the offer is now at 2.6x%. Annoying, but can’t be changed. We have now applied and are currently waiting for the loan approval.

Long-term (10-15 years) interest rates of up to 3% are expected. I don’t think I would speculate.

The market is currently experiencing extreme uncertainty regarding future interest rate developments. The shift away from Russian energy to alternative (before the Ukraine war "more expensive") energy sources does not give hope for significantly falling energy prices. The supply chain issue has been lingering since Corona and is further exacerbated by the war and China's zero Covid policy. For a long time, the ECB hoped it could "wait out" the issue and attributed the inflation rates to one-off effects (in Germany, for example, a changed VAT rate during Corona and very low energy prices during this time). However, it is now becoming clear that the high inflation rates are probably not just temporary but persist due to ever new problems. The Americans have recognized this and show clear signs of counteracting it (interest rate hikes, reduction of bond purchases, etc.). Since the ECB is still acting much more cautiously here, this weakens the EUR/USD exchange rate and increases our oil import prices (still usually invoiced in USD), and thus further fuels inflation. Due to the ongoing inflationary pressure, companies increase prices, and in the end, we "consumers" also feel the consequences.

Contrary to the above points, which should actually lead to significant interest rate hikes, is the issue of immense government and corporate debt. Strongly rising interest rates are simply unaffordable.

The yield curve is therefore currently rising sharply in the short term and then very flat/declining. The bank's entry point for 10Y/30Y is not very different. Price differences rather arise from the priced-in Building Code termination right after 10 years.

From the banking environment, the following information: The banks' funding costs have already risen significantly due to market uncertainty. There are also model changes regarding the risk assessment of mortgage loans that will require higher margins at banks. It is expected that this will be introduced in the mass business in Q3/22.

Does this help with the forward yes/no decision? I do not know because this is always a personal decision depending on income and risk tolerance.

It's like with the weather, three different models, three different forecasts. :D

We are in a similar situation. Actually, I didn’t want to take out a forward contract because we can only repay the main loan in 2026, but we wouldn’t have to, since it runs for 15 years and only 10 will have passed in 2026. Our financing advisor then proactively approached us and I had an offer calculated: 1.9x% for 10 years. It didn’t sound as bad as expected, so we decided to lock in the follow-up financing after all. Since we didn’t have time to take care of it at short notice, we postponed the whole thing by three/four weeks and took care of it during the Easter vacation. As a result, the offer is now at 2.6x%. Annoying, but can’t be changed. We have now applied and are currently waiting for loan approval.

Does the calculation add up? In 2016, for 15 years, the interest rate was certainly significantly below the current forward from 2026/for 10 years. Letting the 15-year loan run and refinancing in 2031 would have been my favorite. You can still put a lot in for another 9 years, so the interest rate of 3…4% in 2031 hardly bothers you. (Of course, without knowing the overall structure. Loan/interest/repayment)