Real estate loan rates have fallen in recent weeks, reaching an average of 3.93% over 20 years according to Meilleurtaux. But some borrowers can expect an even lower rate. So how much can you borrow today with your salary? MoneyVox takes stock.
Can I become a landlord today with my salary? Many French people ask themselves this question. Did I miss the right moment? Should I wait or is it possible to borrow today?
These questions, of course, do not have ready-made answers. It all depends on your income, or even the price of the property you want. One thing is sure, The real estate loan market has been evolving very quickly in recent months. In May 2021, the average credit rate over 20 years was 1.10%, compared to 4.25% on average in November 2023. Three months later, at the beginning of February 2024, the rates are down slightly, 4.05% according to the broker Meilleurtaux.
But then, how much is it possible to borrow today based on your income? MoneyVox offers three simulations to see things more clearly.
If you earn 2000 euros per month
Let’s take the example of a 23-year-old borrower who would like to borrow with an income of 2000 euros per month. According to the standards imposed by the High Financial Stability Council (HCSF), its debt rate is set at 35%, or monthly payments of 700 euros including insurance. With a rate of 4.20% over 25 years, and 0.10% insurance, its borrowing capacity today amounts to 127,907 euros, compared to 136,000 euros in June 2023, or 8,000 euros less. At the time, the 25-year rate was set at 3.60%.
If you earn 4500 euros per month
Now let’s take the example of a couple in their thirties with an income of 4,500 euros per month in total. Their monthly payment will amount to 1577 euros, including the reimbursement of the insurance, set at 0.25%, the loan being insured 50-50 per borrower. With a rate of 3.95% over 25 years, this couple can hope to borrow 284,000 euros over 25 yearscompared to 304,000 in June 2023. That is to say a loss of 20,000 euros over the last nine months.
If you earn 7000 euros per month
Finally, let’s imagine for the last example a couple in their fifties, with 7,000 euros of income each month, i.e. a monthly payment allocated to credit of 2,333 euros. With such income, the couple will be considered a good file by the bank, and will be able to claim a credit rate of around 3.80% over 20 years. With insurance at a rate of 0.40%, their borrowing capacity amounts to 370,700 euros in February 2024, compared to 383,612 euros in June 2023, when rates were 3.40% over this period. In less than a year, they lost 13,000 euros of borrowing capacity.
The current situation remains very interesting for becoming an owner
So should we embark on a real estate project today? I think that prices will no longer move, or almost nothing, with perhaps an exception in Ile-de-France, judges Mal Bernier, director of communications for the broker Meilleurtaux. So there’s no point waiting for prices to fall further if you can borrow today. Moreover, your credit can always be renegotiated downward. The banks have all returned to the market, so it’s a good time to position yourself, especially since some sellers are in a hurry, so there are obviously opportunities to seize.
The current situation remains very interesting for becoming an owner, says the broker Cafpi. The drop in rates, if it continues, will allow borrowers to renegotiate their loans in the coming months.
Conversely, if you do not have the capacity today to finance your project, this does not mean that you will be blocked for the entire year. We can hope to return below 3.50% during the year, and even return to around 3% by the end of the year, concludes the broker Cafpi. All that remains is to be patient.
Real estate loan: find the best rate