Interest rate averaging for 5- and 10-year periods only

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Starting 14 September of this year, ABN AMRO and its subsidiaries Moneyou and Florius will only offer interest rate averaging on mortgages for fixed-rate periods of 5 or 10 years. The 15-year fixed-rate option will no longer be offered.

What is interest rate averaging?

Interest rate averaging allows clients to lower their mortgage interest rate during the fixed-rate period. This may be an attractive option to clients who want to reduce their living expenses, for example because their financial situation has worsened due to coronavirus. If a client opts for interest rate averaging, it means the bank loses out on interest. This is why ABN AMRO charges the client a fee for interest rate averaging (early mortgage repayment fee). The fee is spread over the client’s new fixed-rate period.

Why does ABN AMRO no longer offer 15-year interest rate averaging?

The longer the fixed-rate period is after interest rate averaging has been applied, the more likely it is that the client will partially or fully repay their mortgage early, for example because they move house. If the client repays their mortgage before the end of the fixed-rate period, the bank will not fully recover the loss of interest (i.e. the early mortgage repayment fee which had been spread over those years). This is why interest rate averaging will no longer be offered for 15-year fixed-rate periods.

Until 14 September, clients who opt for interest rate averaging on their mortgages can choose a 15-year fixed-rate period. They can make this change themselves on Internet Banking or discuss their options by calling 0900-9210. After 14 September, clients will only be able to choose a 5- or 10-year interest rate averaging period.

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