We currently have a situation where we advise our clients to make a loan restructuring, which in isolation is not profitable.
This applies to customers who have 2% loans based on bonds maturing in 2047. They can usually either wait for a 1% loan or a 3% loan. What happens first we do not know for good reasons, but we consider 3% most likely.
They have already lost part of the price sensitivity
The challenge with loans in 2% 2047 is that they have already lost part of the price sensitivity. That is, they do not fall as much in price as new bonds expire in 2050. Therefore, we have now counted on some specific customers’ loans and have created 2 scenarios:
- The 2% loan is changed to 3% in 2 years.
- The 2% loan is rescheduled to 1.5% now and then to 3% in 2 years.
If you choose to reschedule to 1.5% now
The debt will increase because both interest rates are rising and at the same time there is a loss of value on the new loan of approx. 2 points. On the other hand, the 1.5% bond is far more sensitive when the interest rate rises, so the conversion to 3% will result in a price gain that far exceeds the cost and the extra loss in price.
In 3 specific cases, the difference in debt after two years is USD 98,000, USD 133,000 and USD 167,000 respectively.
The risk is that interest rates will not rise again and should this be the case, it will take approx. 12 years before the cost is earned on the lower interest rate.
If you change the mortgage institution at the same time
A new assessment must be made, and then there is a high probability that the assessment is higher and therefore a lower contribution rate can be obtained.
If you have loans based on 2047 bonds, let us count on your options.