Credit: it’s time to borrow cheaper than inflation

For borrowers, all indicators have rarely been so positive: prices per square meter are low and stable, and inflation is low. A situation that might not last: it’s time to invest!

 

Take advantage of low rates

credit loans

At the start of 2016, prices per square meter of real estate remained stable and low with a national average of $ 1,460 per m 2. In parallel, the rates posted by banking organizations, or specialized, are at the lowest for months, at 2.15 % in February 2016. So many parameters that should encourage you to get started in real estate investment, that be it your main residence or for the creation of a heritage.

The advantage of these lowest rates, even if the criteria of the banks change little, is that it is even more interesting to buy with a minimum contribution. So much so that the cost of borrowing has become almost negligible. For example, a loan of $ 150,000 over 15 years in 2001, at the rate of 5.62%, cost you over its term $ 72,336 in interest, or a monthly repayment of $ 1,235.20. Today over the same period, this loan will cost you only $ 25,618 for a monthly payment of $ 975.66, while inflation over the same period was almost 23%!

 

Playing with inflation

credit loan

For the second consecutive year, inflation was almost zero in France in 2015. But if it were to restart, your money not invested (or that you could have borrowed) would lose its value. The risk is very real, because all the parameters of a restart are met:

  • Oil is at its lowest, it can only go up.
  • The dollar is at its highest, it can only fall.
  • Energy prices always rise with a delayed effect in times of conflict.
  • Increasing spending on armaments because of wars that are getting bogged down.
  • Low unemployment in the United States is expected to drive up wages.

By borrowing now at a fixed rate, you are likely to soon find yourself in a situation where inflation will exceed your rate. You just have to find the property of your choice!

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