Belgian long-term interest highest in a decade: what does it mean for you?

Belgian long-term interest rates have hit the highest level in a decade.  Interest on ten-year bonds has now reached 3.2%. The further rise is bad news for mortgage holders and the Belgian state, but better news for savers.

The recent increases in interest rates are impacting on Belgian mortgages. The interest rate barometer operated by Immotheker Finotheker indicates that the average rate on a 20-year-fixed rate mortgage has risen to 3.24% for borrowers borrowing up to 80% of the value of the property.  Homebuyers borrowing more will need to fork out 3.47%.  Over the course of the last year these two rates have risen by 1.86% and 1.97%.

It's bad news, but last year house prices did not keep pace with inflation meaning they became cheaper in real terms.

The impact on rates for savers remains limited.  Highstreet banks have or are increasing rates slightly.  There are bigger rises among smaller banks, especially among online operators.

Savings rates follow short-term interest rates.  These rates are lower because clients can access their funds at all times.  This isn’t the case for monies that are committed for longer periods allowing a higher rate to be offered.

The higher interest rate is bad news for the Belgian government.  The cost of all its borrowing has gone up yet again and with a budget deficit that is the highest in the Eurozone there doesn’t seem to be any early relief in sight.

The higher interest on the Belgian debt weighs on future budgets and complicates further expenditure.  The Belgian national debt that was already quite high now threatens to rise even further.

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