Less than 1%, it’s over (or almost)

The party is over! Borrowing less than 1% in 20 years is currently reserved for several privilege profiles. The rate is rising, the Meilleurtaux Observatory confirms, but how far? The war in Ukraine will probably change the situation.

Borrow to buy more expensive real estate.. The increase in rates reported since the beginning of the year was reaffirmed. At the 33rd Observatory dedicated to real estate credits, announced this Tuesday morning, Meilleurtaux will take points home. Mortgage rates below 1% in 20 years are getting lower and lower, according to brokers. This was the standard at the end of last year.

Observations that have clearly appeared in the last few weeks. Therefore, in January 2021, 38% of the 20-year files processed by the broker got a 0.90% rate in 20 years and 29% of the files got 1.10%. In February 2022, 29% had an offer of 1.30%, 42% had an offer of 1.10%, and only 13% had an offer of 0.90%.Currently, almost one of the three offers Between 1.10% and 1.30%.. Mal Bernier, Communications Director at Meilleurtaux, emphasizes that the situation is almost back in the fall of 2019. From 1%, the new 20 year rate standard will be applied 1.2%..

Difficult to borrow, 3-digit proof

Specifically, the impact on the € 200,000 loan is as follows: Excluding insurance, monthly payments from € 920 per month at a 1% rate will increase by 1.2% to € 933 per month. 13 euro difference It’s only monthly, but it’s calculated for thousands of euros for the duration of the loan. In 20 years, the total cost of the loan will reach € 23,976. Over 3227 euros!! Inflationary pressures are so strong that banks have been forced to scale up so far. This is true for March as well, but Mal Bernier warns that development needs to be paid attention, especially in the current situation in Ukraine.

Uncertain rate

Conflicts can certainly reshuffle the card. Without this geopolitical context, interest rates would clearly have begun to rise again in order to curb inflation. However, in the current situation, the European Central Bank cannot behave as expected.We are in Maximum uncertainty.. This is a long-standing unprecedented situation that is very difficult to predict and we need to be very careful. Yes, key rates are down, but this decline is not inherited by banks on that scale and is directly related to the geopolitical context. The real question is how banks will behave in the coming weeks and months.A priori, the gradual rise of the bar The most reliable scenario But once again, you have to be very careful, explains Mar Bernier.

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Borrower insurance to cover?

If interest rates rise slightly, borrowers will be able to take advantage of the borrower insurance reforms that will take effect on June 1. This insurance, which is almost obligatory to take home to grant a mortgage, can be terminated much easier. It is easier for new borrowers, and borrowers with current credit, to take advantage of potentially cheaper offers from competitors to terminate the insurance offered by the bank. According to the profile, the savings are: 5000-15000 euros, French will always regain purchasing power with this insurance change! Emphasize Marbernier. But, as always, be aware that the devil is in detail, as insurance can increase with certain profiles, such as the youngest or most modest profile. Beware of adverse effects!

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