Real Estate Loans: Interest Rates Rise Slightly

Loan costs have begun to rise at the beginning of the year. The slowdown in the market will affect certain borrower profiles.

Analysis of several credit brokers has begun to show slight bullish signs on interest rates on mortgages offered by banks. According to Meilleurtaux, rates are trading at an average of 1.05% over 20 years, excluding insurance. Very close to the 1% shown by Artémis Courtage.

Therefore, banks would have raised lending rates by 0.2 percentage points from 0.1 at the beginning of February. Therefore, if real estate prices are stable, renting to buy a home can be a bit more expensive (read the box at the end of the article).

Evolution of personal credit rate

According to the Crédit Logement / CSA Observatory, the average interest rate on these loans is all the same at record lows, 1.07% excluding insurance at the end of January, for all periods combined.

Maximum debt ratio

1 or laterer In January, the Financial Stability High Council (HCSF) recommendations became a binding standard for banks to avoid the mortgage boom. They define a maximum debt ratio of 35% of income and a maximum borrowing period of 25 years for the old and 27 years for the new.

These recommendations have already been widely applied by banks. And some exceptions are still acceptable. However, access to credits is becoming tighter with the youngest or most discreet profile, especially for first-time buyers.

The rise in consumer prices by INSEE at the end of January is estimated to be 2.9% in one year, the issuance rate of French government bonds (OAT) will rise in 10 years, and income in the positive territory is in an inflationary environment. 0.65% on February 21 can partially explain this evolution of bank size.

Home price index

However, the often established link between 10-year OAT and mortgage rates is controversial. According to the Bank of France, the funding for mortgages comes primarily from the recycling of demand deposits and regulated savings accounts, especially while France holds more than € 510 billion in its current account. Because there is a possibility that it will be done.

The daily re-deposit of this cash by the European Central Bank (ECB) financial institution is actually taxable. The ECB is still helping the economy recover.

Double contraction

Sales of existing homes reached record levels of 1.2 million in the last 12 months of December, according to notaries. This development was supported in support of suburban housing and relocation to small and medium-sized towns. The geography of this new real estate reflects relative dissatisfaction with very large cities and growing interest in greener areas.

Old house sale

However, this trend, which has reversed the tariff hierarchy between large agglomeration hypercenters and semi-rural areas at the end of the first confinement since the summer of 2020, seems to indicate a pause (box). See).

Lending contraction favors the best borrower profile, but limits demand while housing supply is expected to lose momentum and slow down the market. Possible projects are still possible, especially if price stabilization improves health visibility.

Surfaces that buyers can get by refunding € 1,000 per month for 20 years

town Average selling price (1) Purchasing power (2)
Real estate (area)
Change for over a year
In meters2 of %
Marseille € 3,339 per meter2 67 meters2 + 3m2 + 4.7%
reel € 3,678 per meter2 61 meters2 -1m2 -1.6%
Strasbourg € 3,993 per meter2 56 meters2 -4m2 -6.7%
reindeer € 4,013 per meter2 56 meters2 -3m2 -5.1%
Bordeaux € 4,992 per meter2 45 meters2 0m2 0%
Lions € 5,544 per meter2 40m2 + 1m2 + 2.6%
Paris € 11,496 per meter2 19m2 -2m2 -9.5%

(1) Source: Seloger and notary public. (2) Source: Meilleurtaux. At 1er In January 2022, a monthly payment of € 1,000 for a loan of € 223,896 at 0.7% (excluding insurance) for 20 years.


Old house prices are stable

This year started with stable relative prices. The best agent barometer shows a particular wait-and-see attitude in the national real estate market. “The traditional winter decline already seen in France’s 50 largest cities since the end of October has also affected rural cities since the beginning of the year,” said Thomas Lefebvre, science director of online real estate valuation sites. Says.

After chaining growth for almost a year, these local governments are also currently undergoing a stabilization phase.

slow down

This phenomenon is also seen in 10 major cities, but it varies. According to Meilleurs Agents, some cities, such as Strasbourg (-0.6%), are on a slight downtrend.

Conversely, others resist, such as Bordeaux (+ 0.5%), Nice (+ 0.6%), Toulouse and Lille (+ 0.8%). In Paris, prices have fallen by nearly 2% since the fall of 2020, but the decline seems to be stagnant now.

The LPI Se Loger Observatory has also confirmed that the market has slowed sharply since the summer of 2021. Not only have the prices of older ones risen, but the down payments required by banks are now at a level that excludes most of the potential demand from the market. Michel Mouillart, Principal Investigator of LPI SeLoger, said.

Local role

However, this observation in the most recent period does not undermine the observation of price increases in 2021, especially the observation of old apartments in most cities with more than 50,000 inhabitants. “In these cities, where prices are far from the prices of Paris and its first crown, the movement was mainly carried by the state,” specifies Michelle Muyer.

In 10 regional cities, including Angers, Beauvais, Laval, Montauban and Vannes, average prices rose by at least 15%, but this was only true for the three towns of the Ile-de-France region. However, the 20 most expensive cities remain in the Ile-de-France region.


Borrower insurance can be canceled at any time

As required by Hamon Act since 2014, you will be able to terminate your mortgage-related borrower’s insurance at any time within 12 months of the signing of your first contract, or on the anniversary of that. Notification two months before the Birkin amendment came into effect in 2018.

Therefore, the Lemoin Act passed by Congress allows borrowers to choose better guarantees or more economically favorable insurance policies at any time.

competition

This measure should a priori promote competition, provided that not all insurers are encouraged to raise rates due to the additional cost of treatment. “Loan insurance, which is considered in the debt ratio calculation, is a problem for borrowers because it can represent up to 2 points of debt. Therefore, it is possible to overturn a file beyond the maximum debt ratio of 35. %, “Sandrine Allonier, Head of Research for Credit Broker Vousfinancer, said. This measure is accompanied by other specific provisions.

Medical surveys are not required for loans of less than € 200,000 per person (€ 400,000 for couples insured by 50% of each head). This period occurs before the borrower’s 60th birthday. In addition, the deadline for obtaining the right to be forgotten is reduced from 10 years to 5 years, especially for cancer and hepatitis C.