High interest rates with fixed interest, alternative flex loans?

I can confirm, the day before yesterday I received an offer of 4.3% for 10 years. Our house bank was never the cheapest, but that was quite surprising to me...

But it also depends on the volume and planned repayment. Welcome to the year 2008. We had 4.6% for 10 years.

Uff, 4.3% is quite a figure. Does that correspond to an 80% loan-to-value ratio? Are you going ahead with it anyway? I only follow the portals Interhyp and Dr. Klein and am therefore surprised by the high rate.

@ : A further escalation of the conflicts cannot be ruled out, yes. In the extreme case, the issues we are discussing here are anyway smoke and mirrors. But what I still don’t understand is how anyone believes that the energy price-driven inflation in Europe can be cushioned by higher key interest rates? But basically, it’s good that there is panic – that only shows that the ECB is getting closer to its goal and people believe it. However, the time will also come when winter is over, the LNG terminals are running, and inflation is falling.

But in any case, many thanks for the enlightening discussion!

What I still haven't understood is how people believe that the energy price-driven inflation in Europe can be mitigated by higher key interest rates?

A look into the past helps here. The inflation of the 70s was initially also "only" caused by energy shocks. Then it became self-sustaining, because of course the workers demanded correspondingly more money, and when they got it through, the companies raised prices. The goal of the interest rate hikes is primarily to reduce the scope for second-round effects. And to dampen demand. A higher interest rate won't change your heating needs, but, for example, it will mean you don't build a house and thus need less energy-intensive material.

Phew, 4.3% is quite a figure. Does that correspond to 80% loan-to-value? Are you still going ahead with it?

We want to renovate.
For us, it is currently more about finding reliable companies than about financing. The amount would be manageable.
The 4.3% would be on 100%, because x% of the renovation costs still have to be added to the previous property value to calculate the value after renovation and the final loan-to-value ratio.
Therefore, 100% was initially used as the worst case.

A further escalation of the conflicts cannot be ruled out, yes. In the extreme case, the topics we are discussing here are anyway smoke and mirrors. What I still have not understood is how anyone believes that energy price-induced inflation in Europe can be cushioned by higher key interest rates? But basically it is good that there is panic – that only shows that the ECB is getting closer to its goal and that people trust it.

Yes, I agree with you. Very high inflation with a wage-price spiral is probably the lesser evil than still high inflation with a strangled economy because interest rates are too high. The high interest rates ultimately also hinder investments in the energy transformation that is so important now.

But the point will also come when winter is over, the LNG terminals are running, and inflation falls.

When winter is over, it will probably become apparent that, for example, the local children's hospital (good energy standard) has accumulated €4,000,000 in heating cost debts (currently it is €1,000,000). Is the actually well-running and system-relevant hospital supposed to file for bankruptcy and close now? Many institutions are in the same situation. But this is currently being kept quiet. Do you still believe that everything will get better then? Interest rates will more likely continue to rise.

A little expensive LNG won’t help after winter either. You are buying into that fairy tale now.

Phrases like "There is currently a lot of hot air in the market" I unfortunately heard very often in October 2021 as well. The past year shows that this optimism basically only makes everything worse and instead you have to be willing to adapt to all the chaos.

The financial advisor admitted that something went wrong during the preparation of the offer. I have posted the new offer here, which of course has completely different figures.

For me, the variable loan is therefore out due to the 2.75% margin.

Yes, I agree with you. A very high inflation with a wage-price spiral is probably the lesser evil than a still high inflation with a strangled economy because interest rates are too high.
The high interest rates also ultimately hinder investments in the energy transition, which is so important now.

If there is another wage-price spiral with persistently high inflation, the Fed and ECB will continue to raise interest rates even knowing that the economy will be strangled.