While inflation stood at 6.2% over one year in November, many real estate professionals repeat that borrowers are now taking out negative real rate loans. A good deal in theory. But what is it really?
Mortgage rates are soaring. While a borrower could expect a credit of less than 1% over 20 years in February 2022, interest for the same duration should negotiate around 3% in the first quarter of 2023.
Despite everything, many players in the real estate market advise people with a real estate project to get started without delay. According to them, despite inflation which stood at 6.2% in France over one year in November according to INSEE, the period would even be particularly favorable.
An advantageous loan, when possible
In times of inflation, your housing budget, if you are a tenant, is likely to increase even if there is currently a fixed rent control of 3.5%, recalls Ccile Roquelaure, spokesperson for the broker Empruntis. On the other hand, when you borrow for a real estate purchase, your monthly payment always remains the same. Which means you set that expense in stone for the next twenty years. This is good news as the rest of the budget (food, energy, etc.) is progressing, housing being the biggest item of expenditure for French households every month.
When taking out a mortgage, borrowers must not exceed a fixed debt ratio of 35%. As a reminder, the High Council for Financial Stability (HCSF) has obliged since January 1, 2022 not to go beyond this ratio between the borrowing costs and the income of buyers. And, this rate would decrease as inflation increases.
But this is only valid on the condition that income increases, ideally as much as inflation, which is far from always the case, nuance Sandrine Allonier, spokesperson for the broker Vousfinancer. In 2023, wages are expected to increase by 4% on average. On the other hand, if the borrower’s income increases in the same proportions, the part dedicated to the repayment of the mortgage is logically less than at the start of the loan.
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A saving force
The second benefit is that the repayment of your mortgage is like forced savings. You build a real estate heritage and it also helps to fight against inflation because your property is not going to devalue enormously, develops Ccile Roquelaure. Today, buying your main residence means securing a heritage for tomorrow.
Real estate credit: is it still worth making an early repayment?
But not everyone can borrow in the current context marked by sharp price increases. With inflation, your compulsory expenses (food, energy) increase, and inevitably the rest of your living decreases, it is therefore more complicated for households to borrow, explains Sandrine Allonier. For example, people who receive the minimum wage do not necessarily have an interest in buying during a period of inflation, because in the short term, they are strongly penalized by the rise in rates and property prices, even if the minimum wage has been successively revalued.
For those who can, it is therefore always interesting to borrow, whatever the period. And this is even truer for rental investment, recalls Sandrine Allonier: Investing in a period of inflation is very interesting because the monthly payment you pay remains fixed, while the rents you collect continue to increase and take an increasing share. of your refund.
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