Despite the rise in mortgage rates which is holding back some borrowers, those who still can do so would do better to hurry to make their project a reality. Because the declines are still likely to be expected.
2.35 over 20 years and 2.45% over 25 years according to Empruntis, 2.42% over 20 years and 2.59% over 25 years according to Meilleurtaux… While they were less than 1% in February 2022, mortgage rates continue to soar, month after month. To the point, according to a study revealed by PAP.fr on November 30, thatone buyer out of 10 was refused a loan in November. To explain this refusal, 62% cite the wear rate. This maximum rate above which the banks do not have the right to lend includes the interest rate of the credit, the administrative fees or even the borrower’s insurance. Calculation quarterly and currently fixed at 3.05% for loans over 20 years and moreit will be raised on January 1, 2023.
Should we then wait for an increase in the wear rate to embark on a real estate project? The problem is that higher usury rates often lead to higher mortgage rates because banks fail to pass on the cost of the money they borrow to the mortgage. Rates should increase by at least one point in the next six months, because while the European Central Bank has raised its rates by one and a half points since July 2022, mortgage loan rates in France have not , climbed only 0.5 points over the same period. Mid-2023, it should therefore be difficult, except for excellent profiles, to borrow over 20 years below 3.5%, analyzes Barbara Castillo Rico, head of economic studies for Meilleurs Agents.
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However, the rise in mortgage rates logically reduces the purchasing power of borrowers looking for housing. In a survey published in early November, Meilleurtaux explained that a couple earning 4,000 euros per month had lost the equivalent of 30,000 euros in 10 months, their borrowing capacity dropping from 285,000 euros to 255,000 euros. In its study, Meilleurs Agents estimates for its part that to compensate for this increase in credit rates, real estate prices would have to have themselves fallen during the same period by -8.7%. While the latest figures do indeed show a slowdown in real estate prices, this remains marginal for the time being, even though some experts are counting on a drop of around 10 to 20% in the months to come.
An increasing amortization period
reading these figures, wouldn’t it be better to put your real estate project on hold and wait for better days? It all depends: Buyers should be aware that the commitment they are making today by becoming owners is stronger than a few years ago because the amortization period is changing, explains Barbara Castillo Rico. In January 2022, it only took 4 years to amortize the various costs related to the purchase and therefore make the acquisition of his main residence more attractive than renting. It now takes eight years on average to amortize its acquisition.
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However, in the long term, it remains financially more attractive to buy one’s main residence than to remain a tenant, assures Barbara Castillo Rico. Another fact works in favor of future buyers: the sanctions to come concerning the most energy-intensive housing, called energy sieves, could well rush many goods onto the market by 2028. Indeed, properties classified G in the energy performance diagnosis (DPE) can no longer be rented out from 2025. The same ban will apply to housing classified F from 2028.
long term, it remains financially more attractive to buy one’s main residence than to remain a tenant
While some owners have already announced their desire to override these prohibitions, others are rushing to put their property up for sale. However, a study carried out in April 2022 by Meilleurs Agents and Se Loger shows that with equivalent characteristics (age, surface area, etc.), a property poorly rated (F or G) on the energy performance diagnosis (DPE) sees its selling price reduced by 6.7% compared to that of a good student (C, D or E). A class F or G apartment at the DPE sells, on average, 13% less than if it is labeled A or B.
In a press release sent on December 1, Immonot, the real estate site for notaries, estimates that if sellers have kept the advantage for several months, it would seem that in 2023 the real estate game turns to the advantage of buyers. With more properties on the market, there are plenty of opportunities to negotiate prices. Advice shared by the head of economic studies at Meilleurs Agents: The balance of power between buyers and sellers has clearly reversed and this in favor of buyers. We must take advantage of this by no longer hesitating to negotiate the price of properties which, for the first time in years, are having trouble finding a buyer.
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