The last fifteen news
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Why a capped rate ?
Launched in the end of the 80s, the capped rates now represents 35% of the total of the mortgages in France. Why?
- Initial rate below a fixed rate
Short term rates which are used to calculate the variable rates on the financial markets are below long term rates which are used to calculate the fixed rates. It is very important to benefit from low rates at the start of the mortgage.
- A strict monetary policy in Europe due to the Euro
The Euro has been the result of 15 years of efforts from the European Governments to create a powerful Euro. Consequently the Governments struggled against inflation and tried to reduce the impact of huge public deficits. This policy has had as a result to lower short term rates.
- New formula to secure variable rates
Step by step banks improved variable rates and launched the capped rate with capped monthly repayments to protect the borrower. In this case the duration of the mortgage increases as the monthly repayments are not increasing. That's allows the borrower to stay in a position to face the monthly repayments while interest rates are increasing.
Bertrand Le Mire | Date Published : 2005-03-17 09:36:46 | Last modification time : 2005-06-16 20:37:13
