Jun 20 2019

Banks Can Practically Search Construction Loan Effective Interest Rate

Posted by domain admin in News

Botch the new price indication regulation: the new EU consumer credit directive has been in force since June 11, and she should ensure that borrowers can better compare the offers. But together with the law on the implementation of the European standards, the Federal Government has recast the price indication regulation and shot a capital stand there with the present guidelines for determining the effective interest on construction loans. So far was to calculate the APR for loans that the investigation refers to the duration of the interest period. This corresponded to the practice in practice, even though according to contract usually the loan anytime will be continued after the end of the interest rate to variable interest rates. Virtually all housework cast then immediately back the credit in a fixed interest rate loan either at same bank or another institution, which offers more favourable interest rates.

But now can be found in the annex to article 6 of the price indication regulation, establishing in detail the calculation rules to the effective interest rate, all the A fatal addition at the end: If repayment takes more than the interest rate, and after their principle, the continuation of the loan variable interest rate was agreed, then the interest rate agreed for the duration of the interest rate actually was first to include for the estimated remaining period of the current interest rate for variable loans. Specifically: If the current interest rate for eight-year loan is 2.5 percent at 3.55 per cent and variable loan, the Bank in the effective interest rate can mix both interest rates. 3.55 percent for the first eight years and fictitious 2.5 per cent for the estimated remaining service life that pushes the effective interest rate on miraculous 2.92 percent on offer. Exactly this condition sleight of hand was to find similarly calculate other banks on July 16 on the Internet pages of the Stadtsparkasse Dusseldorf. Sometimes called only the effective interest rate, although this is now any significance. For many years has been willing to finance is strongly advised at “Construction loan offers always the effective interest rate to compare, and now this will be thanks to rough Pfuschs the legislation overnight to waste”, complained about the publicly appointed and sworn home loan expert Peter Sachs from the Sachverstandigensocietat vajra & Sachs in Friedrichsdorf. “Even more so: banks that continue to show the effective interest rate after the previous transparent method, violate the new price indication regulation and thus risk a warning.” The now mandatory calculation way entirely misses the reality, because the continuation of loans after the end of the interest rate to variable interest rates is unusual in this country as well as the conclusion of a variable construction loan. Anyway, the current variable rate is good in any way as a legitimate basis for an interest investigation which refers to periods, are the 10 to 40 years in the future. Where until then, interest rates actually are, today, no one knows. This is a technical blunder in the legislation, of the banks of door and gate “opens for manipulating their credit offers”, Sachs criticized the new rules, and calls for the immediate return to the old method of calculation: otherwise must put up with the legislature the question, why he replaced a functioning and transparent regime with a construct that makes any comparison in an so existentially important area of life such as construction funding to the farce. “