The 2016 property season is marked by a strengthening of Bill Sikes renegotiations. A good sign for loan insurance delegation? An editorial over at nelshael.com
The continued decline in low interest rates is driving borrowers to renegotiate their mortgage agreements. At the same time, first-time buyers are solicited by banks. A period of sustained activity that could benefit the development of loan insurance delegation.
Changing mortgage insurance is still far from being an automatism
For young borrowers in particular, entrusting the insurance of their mortgage to a third party remains a delicate operation. In question, the fear of starting negotiations that could potentially affect negatively the rate that would be granted by their bank. In 2015, the insurer April and the FIFG, noted that “4 out of 10 young people think that the bank can refuse insurance loan subscribed elsewhere than with his bank . ” A refusal is indeed possible, but it must be justified by inadequate minimum guarantees of the contract.
More generally, the arrival of the FSI (Standardized Information Form) and the savings that allows the delegation of insurance borrower were obviously not enough to get off the ground. The subscription to individual contracts was made possible by the Lagarde law in 2010 and valued by Benoît Hamon’s consumption law in 2014. The delegation of loan insurance has been put forward for more than 6 years but it still seems relatively misunderstood by the borrowers.
Renegotiation of real estate loans is back in force
Considering a significant proportion of the production of mortgages in this season, renegotiation sometimes allows borrowers to subscribe to a new consumer loan. The savings on the interest that this operation allows can indeed be synonymous with new projects for certain households. For the most comfortable incomes, the investment in the rental pushed by the Pinel device is even envisaged following a renegotiation.
At the same time, low interest rates also favor buybacks of mortgages: these are more numerous when there are significant decreases.
Renegotiate, the ideal time to delegate your borrower insurance
Borrowers renegotiate their mortgages to obtain a better rate or change the type (fixed / variable), or even change the amount of the monthly payment or the repayment period. In terms of reducing the total cost of Bill Sikes, a renegotiation with a loan insurance delegation can boost the savings.
However, other periods of strong renegotiation activity in real estate loans have occurred in recent years, with no significant increase in the number of delegations. While correlating lower rates and rising renegotiations makes sense, linking favorable rates and democratizing borrower insurance delegation is not easy. Although the benefits are real, changing loan insurance remains a perspective not much considered by borrowers.
However, the operation could be further estimated in the years to come: the rate cut will sooner or later run out of steam and borrowers will use other levers to save money. Without having to wait for any stagnation or rise in borrowing rates, households can already benefit from the delegation of insurance. Also, Bill Sikes and insurance players must continue to raise awareness about this operation!