The rise in mortgage rates leads to a loss of purchasing power for households seeking to buy property. If the prices of goods could fall in 2023, this may not be enough.
We advise all project leaders to secure their financing without delay under current conditions. In its January rate forecast, published on Tuesday January 3, the broker Cafpi is clear: if you have a real estate project, it is better to hurry.
However, the conditions for access to real estate loans are no longer as excellent: the rates have thus reached levels not seen since the end of 2015, between 2.50 and 3% over 20 years, and between 3 and 3.5% over 25 yearsaccording to the broker Vousfinancer.
Less alarmist than brokers, the Banque de France nevertheless reported average rates above 2% in December, a first since April 2016. doubling of rates in one yearsince an average loan over 20 years could be negotiated at 1% at the start of 2022.
A decline in real estate purchasing power
The increase in rates therefore rhymes with a decline in the real estate purchasing power of borrowers. As explained to us a few weeks ago, Xavier Timbeau, Principal Director of the French Economic Observatory (OFCE), the risks of blocking the real estate market come from the rise in credit rates. A study published in early January by Meilleurtaux shows, for example, that for the same monthly payment, borrowers lost up to 34m2 in Le Mans between 2021 and 2022.
For example, when the rate of a loan of 150,000 euros over 20 years goes from 1% to 2%, the amount to be repaid ultimately pass around 165,500 euros more than 182,000 eurosor some additional 16,500 euros.
Can this situation bring down real estate prices? If buyers find themselves blocked, it will probably be necessary go through a notable price correction, around 10 20%, predicts Xavier Timbeau. But not right away: It takes time for the seller to agree to lower his price. There are always buyers in a hurry, or very wealthy buyers, so it can be deceptive for a few quarters.
Lowering prices could therefore take time. In a study from December 2022 on mortgage loans, Crédit Agricole estimates that the slow but steady rise in mortgage loan rates, the impact of the conflict in Ukraine, the deterioration in the economic situation and the insufficient supply of new builds would lead to a correction in sales and a slowdown in prices.
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More precisely, prices for the old should slow to 4.8% on average in 2022 and 2% in 2023, announces the study. However, at the same time, mortgage rates may well continue to climb. It’s a safe bet that we could review the credit rate scales at 4% at the end of 2023, notes the broker Vousfinancer in a note published in early January.
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