Responsible for the start of the 2008 financial crisis, variable rate mortgages still smell of sulphur, particularly in France, where they have never met with immense success. The principle of these loans can in fact frighten those who seek to borrow money: the loan rate is generally lower than the average for fixed-rate loans in the first year, but it changes according to the level of the rent of the the money afterwards.
An interesting prospect when one anticipates a drop in rates, this was also the case in the early 2000s, when these variable rate loans attracted a certain number of French borrowers. These credits, on the other hand, have little advantage when the rates are low, as in recent years.
Variable-rate mortgages, which had disappeared from the bankers’ shelves, are reappearing. This phenomenon is all the more surprising given that rates have risen sharply in recent months.
Thus, in July, at the broker Cafpi, customers were able to borrow at an average fixed rate of 1.48% over fifteen years compared to 1.29% in June; 1.58% over twenty years against 1.42% and 1.75% over twenty-five years against 1.57%. And if the ten-year Treasury bond rate (OAT), which had reached 2.39% at the beginning of June, has fallen back below 1.7% (its May level), the recent increase in the key rates of the European Central Bank (ECB) does not bode well for the future.
Counter-proposals in variable rates
However, some establishments offer mortgages at variable rates. “The movement is far from being generalized, it concerns a few mutual banks [Crédit agricole, Crédit mutuel, Caisse d’épargne, Banques populaires…]but it can becomejudge Mael Banier, spokesperson for the broker Meilleurstaux.
“A regional bank has reinstated it in its scale, but it wants it to be used only for specific needs such as a bridging loan. Another regional bank told us to restart one in September,” observes Cécile Roquelaure, director of studies at Empruntis. “We see that some banks are starting to make counter-proposals in variable rates. Others have confirmed to us that they think very strongly about promoting these credits to their commercial network and the brokers they work with,” we say at Pretto. The broker Cafpi has, for its part, started to offer this type of loan to some of these customers.
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