ABN AMRO today announced that it will offer its mortgage clients interest rate averaging as soon as possible.
Interest rate averaging allows clients in some cases to benefit from the currently low interest rate by spreading the penalty interest and fees over the remaining term of their current mortgage. Whether a given client can benefit from interest rate averaging depends on several factors, including the type of mortgage, the interest rate and the remaining fixed-rate period.
Due to uncertainties about the tax treatment of penalty interest, among other things, ABN AMRO previously believed it was irresponsible to offer clients interest rate averaging. Now that Dutch State Secretary of Finance Eric Wiebes recently announced that these uncertainties and hindrances will be resolved, ABN AMRO has decided to offer clients this service.
ABN AMRO developed interest rate averaging so that clients who could potentially benefit from this service can use it in a responsible manner. At this point, it is still uncertain when interest rate averaging will be introduced. The bank wants to offer the service as soon as possible, but thinks it will take at least six months before it is ready.