Is Now the Right Time to Refinance Your Mortgage to an Interest Rate Below 3 Percent?

According to the Immotheker interest rate barometer, the average interest rate on fixed-rate mortgage loans with a term of 20 years is now 2,96 percent. This is a decrease of approximately 0,15 percentage points compared to mid-January and the lowest point since the end of 2022. On Spaargids.be we even see interest rates of 2,50 percent. Anyone who took out a loan in November 2023 did so at a high interest rate of approximately 3,73 percent.

John Romain, CEO of consultancy Immotheker Finotheker, advises to wait a while before refinancing, because the interest rate could possibly fall even further. He expects that the mortgage rate could fall by 0,25 to 0,50 percentage points this year. But he emphasizes that this is not certain, especially given the uncertainty surrounding the presidency of Donald Trump in the United States.

Refinancing involves costs. If you choose to refinance with your current bank, you should expect to pay a handling fee of up to 175 euros. However, your bank may refuse to refinance your loan, as this would mean a loss of income for them. Romain points out that most couches therefore be reluctant to refinance loans.

You can also opt for refinancing with another bank, but the costs are higher there. The reinvestment fee – a fee of three months' interest on the outstanding amount – and the administration costs can amount to a maximum of 350 euros. In addition, registering a mortgage with a new bank also entails costs, which can quickly amount to several thousand euros.

Romain emphasizes that refinancing is especially interesting if you still have a long term on your current home loan and if the amount you still have to repay is considerable. Although it is often said that refinancing is only profitable if the new interest rate is 1 percentage point lower than the old interest rate, Romain states that this is not necessarily the case. The difference depends on the remaining term of the loan, in which you can earn back the new borrowing costs.

When considering refinancing, Romain also advises taking into account the conditions attached to your credit, such as the automatic termination of mortgage protection insurance, fire insurance, salary direct debit, etc.