The average rate of real estate loans reached a plateau at 4.20% in the fourth quarter of 2023, the highest since 2009, while the number of loans granted continued to fall, according to calculations by the CSA/Crédit Logement Observatory published THURSDAY.
Over the whole of 2023, the average rate reached 3.59% according to the same source. Although it is slowing down, the increase in the average rate of real estate loans has been spectacular since spring 2022, when it was still barely above 1%.
The increase in rates by the European Central Bank (ECB) to counter inflation has increased the cost of money for banks, who passed it on to their customers to maintain their margins. The figures announced each month by Crdit Logement differ from those of the Banque de France, with 4.24% and 4.11% respectively in December.
The BdF statistics have the merit of covering the entire market, unlike those of Crédit Logement, the result of restatement on the basis of partial data. These rates are enough to discourage candidates from purchasing housing, especially since some banks lent less and prices did not fall quickly.
Loans over 20 years and 8 months at the end of 2023, compared to 17.1 in 2014
In the fourth quarter of 2023, the average duration of loans granted was 248 months, or 20 years and 8 months, a level rarely observed in the past according to the Observatory, which recalls that it was 13.6 years in 2001 and 17.1 years in 2014.
During the autumn, the stabilization of ECB rates and the slight increase in the cost of savings resources enabled a significant improvement in bank profitability. The activity of the credit market benefited from this: but the expected impact was mitigated by the deterioration in the solvency of demand caused by the increase in the credit rate, he observes. In 2023, credit production – the amounts loaned – fell by 41.7%. The number of loans fell by 39.5% over the year. The decline slowed in the fourth quarter, with -30.6% and -19.5% respectively.
The fall in real estate loan rates will be slow, according to the Observatory which forecasts a downward trend, a relatively regular pace throughout the year 2024, 4.20% in the first quarter 3.25% in the fourth (with an average rate of 3.60% over the year). Then the drop in rates would continue in 2025, 3.10% on average.
Real estate credit: who can borrow below 4%?
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