Real estate: the credit trend in February 2020

Real estate rates remain attractive on average. However, with the rise in prices, real estate purchasing power is no longer increasing. Are low rates still relevant? Yes, according to the Housing Credit Observatory / CSA the average rate was set at 1.45% for the month of January last for all loan durations combined (excluding borrower insurance). For short-term loans, for example 15 years, this average amounts to 1.22% against 1.41% for housing loans over 20 years. For long terms, 25 years, the rates applied rise to around 1.64%.

 

Average rate for all durations

Average rate for all durations

This means that by borrowing at present, the French can acquire larger areas, under the same borrowing conditions, compared to financing contracted at the start of the decade. Economic experts estimate that real estate purchasing power has thus evolved favorably by almost 30% since 2008. But the situation is changing. Indeed, for 2 years, attractive borrowing rates have not been enough to contain the rise in property prices.

In addition, after the warning from the HCSF (High Council for Financial Stability) the banks have somewhat revised their terms of granting in terms of mortgage.

 

Loan terms change

Loan terms change

While low rates have made it easier for French people to access loans for homeownership, at the same time, the authorities fear that too wide a loan deliverability could lead to a complicated situation. economic crisis. Because if a financial crisis were to occur like that observed in 2008, some borrowers could prove unable to honor their repayment. The banking establishments were therefore asked to limit the risks.

Consequently, the low rates if they are practiced are rather reserved for the best borrower profiles, that is to say the high income or people with the capacity to provide a substantial contribution.

This does not mean, however, that the most precarious households are excluded, but unless going into debt at the limit of the authorized debt ratio, it will be necessary to review the property purchase plan. The latter does not fall into the water, but the additional square meters that could be acquired may have to be abandoned to maintain a loan that does not weigh too heavily on the household budget.

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