As a result of a Federation proposal, the maximum interest rate on government-subsidized home loans may be raised to 130 percent of government bond yields, plus 3 percentage points, according to a document held by the World Economy.
The interest rate on subsidized loans is currently under 10%, even in the worst case scenario (banks charge an average of 2-3% higher interest rate on unsecured home loans for housing loans).
If the new regulation goes into effect
Banks will be able to charge a 12 percent transaction rate on subsidized home loans over a one-year period. A two percent increase in interest on a $ 10,000,000 loan over a 20-year term will result in an increase of approximately $ 13-14,000 in installments.
(Due to interest rate subsidies (the Treasury assumes 50-70% of interest in the first year, depending on the purpose of borrowing and the number of children, then the subsidy is reduced to 35-50% in the 5th year) even with the raised ceiling, they could be charged at an interest rate of 6-8 percent, and later the installment will increase due to the lower level of support.)
The effect of this on the market may be that it may not make sense to use a subsidized one instead of a market home loan and meet a number of conditions (age, marital status, public debt relief, presentation of bills on a construction loan, etc.)
From the banks’ point of view
- or interest rates go up because the banks all decide that. Market equilibrium can be maintained if the current interest rate differential of 2-3 percent between subsidized and market loans remains unchanged.
So if we think about borrowing, but we would wait to see if credit rates are going to turn out well, we can count on the above.