While real estate rates are now 2.5% on average over 20 years, the source of credit continues to dry up, month after month. Will the year 2023 be placed under better auspices?
Will borrowers be able to take out a mortgage in 2023? If the question is deliberately provocative, it is clear that the situation is increasingly complex for loan candidates.
Thus, in December, few banks updated their rates, but those that did increased their rates further. Over the last month of 2022, the broker Vousfinancer reported an average rate of 2.2% over 20 years, when Meilleurtaux even rose to 2.5% over the same period. That is an increase of more than one point in less than a year, since it was possible to borrow less than 1% at the start of the year.
Some banks even display rates of 3% over 25 years, for the moment inapplicable given the level of usury rates, notes Vousfinancer. As a reminder, this maximum rate above which banks are not allowed to lend includes credit interest, insurance, and any bank charges. Fixed at 3.05% for loans with a duration of 20 years and more until next January 1, it now blocks many borrowers.
No question of letting go of the mortgage
And things should not improve in the first quarter of 2023. For the banks, the first three months of production are almost already lost, estimates Mal Bernier, spokesman for Meilleurtaux. There is a delay of about 3 months, which means that the files launched today will be financed at the end of February or the beginning of March. The first quarter of the year is therefore almost already wasted.
A discrepancy that Damien Pacouil, founder of Prelys brokerage, also notices, who however believes that this is to the advantage of borrowers: The majority of banks have already achieved their objectives for the year 2022 and are already looking at the year 2023. Which means that banks now offer rates based not on the current usury rate (3.05% for credits of 20 years and over) but of course the next wear rate applicable from the month of January. Thus, future borrowers can accept a proposal in December, for a loan which will in any case be released in January, the time to bank the client and finalize the project. Today, we are on nominal rates between 2.40% and 2.80% depending on the banks and the duration, explains the founder of Prelys brokerage.
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And tomorrow? Some banking establishments have important objectives for the year 2023, so there is no question of letting go of real estate credit, reminds Damien Pacouil. Even if the banks lose money on certain loans, real estate credit remains an unavoidable loss leader. In January, some banks will therefore seek to capture customers.
3% rates in the first half of 2023?
Others, however, risk raising their bar once again. In the 1st quarter of 2023, the rates will be around 3%, that’s a certainty, assures Damien Pacouil. An increase scenario also favored by the CSA Credit Housing Observatory, which however sets the bar slightly lower, estimating that with the acceleration of inflation and the rise of uncertainties, the average rate for a mortgage could reach 2.80% in June 2023 to slowly come down to 2.45% at the end of 2023, a level at which it would stabilize in 2024.
And the future could be even more lenient for borrowers, in the event of stabilization of the 10-year OAT. After having exceeded 3% during the month of November, the benchmark index for banks for their financing costs for loans fell back to 2.24% on 7 December. Even if it is very volatile and a new rate hike announcement from the ECB could bring them back, we can hope for a stabilization of the 10-year OAT around 2.5%, explains Mal Bernier. In this case, bank interest rates could stabilize at around 3% or 3.20% by February. This would allow, in the month of July, to have a wear rate in line with reality. Both borrowers and banks will therefore have their eyes riveted on this situation, which continues to fluctuate for the time being. As of December 20, the 10-year OAT had risen to 2.81%.
Will January’s new attrition rate already give borrowers some breathing room? As a reminder, the Banque de France normally bases itself on the average of the credit rates (taking the APR, the all-inclusive rate of the credit) of the last three months and the increase of one third to fix the wear rate for the quarter. following. But according to Mal Bernier, the method of calculation actually suffers from a double discrepancy: For the January wear rate, the Banque de France will base itself on files released between October and December and therefore negotiated at the bank on July, August and September scales. A discrepancy which reinforces the scissor effect between credit rates which are rising rapidly and a rate of wear and tear which is barely passing on this increase.
In the best case, a wear rate of 3.50%
While it had been raised from 2.57% to 3.05% on October 1, will the next increase be of the same ilk? For me, in the best case, we will be 3.50%, anticipates Mal Bernier. However, the Banque de France explained a few days ago that the rate increased significantly in July, then more strongly in October and it will be new more strongly next January, taking into account a higher base effect. It is thus possible to expect a wear rate above 3.55%, or even 3.60%, for the month of January. What give a little air to borrowers.
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