Bank interest rates will decrease starting january 1 – IRCC on a Downward
Bank interest rates will decrease Starting January 1 – IRCC on a Downward Trend
Good news for borrowers: starting January 1, 2025, the IRCC (Consumer Credit Reference Index) will continue its downward trend, dropping significantly from 5.99% to 5.66%. Fixed interest rates remain attractive, with a 3-year fixed rate starting at just 4.99%.
Additionally, forecasts indicate that the IRCC will maintain this downward trend in the second quarter of 2025, potentially bringing further benefits to borrowers.
Since debt-to-income ratios are calculated using higher interest rates (IRCC + bank margin), clients will now qualify for larger loan amounts. At the same time, this reduction in IRCC translates to lower total credit costs for borrowers.
For example, a 450,000 RON mortgage loan over 30 years, with a fixed interest rate of 4.99% for the first three years, would switch to a variable rate calculated by adding a 2.3% margin to the IRCC. At the new IRCC value of 5.66%, the interest rate would be 7.96%* starting in the fourth year, compared to *8.29%* currently.
• First three years: The monthly installment remains stable at 2,530 RON due to the fixed interest rate of 4.99%, unaffected by IRCC fluctuations.
• After the fixed period: At the current IRCC of 5.99%, the monthly installment would be 3,321 RON. Starting January 2025, with the lower IRCC of 5.66%, the monthly installment will drop to 3,224 RON, a reduction of 97 RON per month.
Key Benefits of the IRCC Reduction:
• Borrowers can qualify for higher loan amounts.
• The total cost of the loan will decrease by over *31,500 RON*.
• Monthly installments will drop by nearly *100 RON* after the fixed-interest period.
• The continued downward trend of IRCC in Q2 2025 could lead to additional reductions in monthly payments and total credit costs.
This is a promising outlook for borrowers, signaling lower expenses and increased affordability in the coming years.
