A favorable period for real estate projects, the return could however prove difficult for certain borrowers because of the rate of wear, which will not be raised before the beginning of October. In the meantime, borrowing remains very interesting for customers who can.
If the Julyists have already found their way back to work, the Aoutians will soon follow. And in a few days, the children will be back on the school benches. These prospects do not rejoice you? Let’s look for the positive: the start of the school year is often synonymous with new things, for example real estate projects. real estate restarts on September 15, once the children have been sent back to school, confirms Damien Pacouil, founder of Prelys Courtage. Then, the activity continues until the end of November.
For mortgage applicants, the summer months have often been perilous, partly because of the wear rate, the maximum rate (including, in addition to the nominal rate, various administrative fees and borrower insurance) at which banks are allowed to lend money. It is updated quarterly. The problem is that in times of rising mortgage rates, the latter has difficulty adjusting. On July 1, the rate of wear for a loan over 20 years or more was raised by 0.17 points, to reach 2.57%, against 2.40% between April and the end of June. At the same time, the increase in average rates over 20 years was 0.44 points. What block many files.
Since last April, we have recorded a 40% drop in the production of mortgages, said Bruno Rouleau, president of the Professional Association of Credit Intermediaries, a few weeks ago. According France 2, who cites a study conducted for the French Association of Bancassurance Intermediaries (Afib), the picture is even bleaker: since January 1, 2022, 45% of loans have been refused because of the wear rate.
The situation is absurd… These French deprived of real estate loans because of the wear rate
The burden of borrower insurance, especially for customers over 45, but also the standards of the High Council for Financial Stability (HCSF) which imposes a debt ratio of 35% maximum, are all blocking factors.
Stabilized rates?
what can we now expect for the start of the school year? First good news for borrowers, 10-year OAT – French government borrowing rate indicator, which acts as a benchmark for changes in the credit market in France – stabilized in recent weeks. After reaching 2.35% in mid-June, it has now fluctuated between 1.40% and 1.54% in recent days.
After several months of continuous rise, mortgage rates could therefore also stabilize at the start of the school year. To hope for a drop? Few chances, according to Ccile Roquelaure, spokesperson for the broker Empruntis: I think it would be too optimistic to hope for that. Banks have not been able to pass on the rate hikes of recent months, so some may be tempted to leave their rates high enough to keep the margins low they have today.
We will see the strategy of the banks, tempered by his side Damien Pacouil. As the OAT is no longer rising, or even falling, banking partners have already let us know that they were not necessarily going to raise their rates in September. Some establishments will reposition itself to attract more customers, when other banks less in conquest will take the opportunity to rebuild their margins. One thing is certain, while many blocked customers are currently being asked to wait, rates should not go up, even by 0.10% or 0.20%, because that would block even more borrowers.
It’s always time to borrow
On the other hand, for those who can, the period remains conducive to borrowing. With an average rate of 1.79% over 20 years in August, borrowers wishing to get into real estate still benefit from loans at rates well below inflation (measured at 6.1% over one year in July according to INSEE). If you have a real estate project, get started today and if really blocked, you will try again on October 1 once the rate of wear and tear has increased, confirms Ccile Roquelaure.
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Still, there is currently tension in the real estate sector, suspended whether or not to grant real estate loans. According to figures from the Bank of Francethe production of new loans will reach 21.6 billion euros in July, against 22.7 billion euros in June and 26.8 billion euros in May 2022. The Minister for the Ecological Transition notes for his part that, concerning the sales of new homes, 13.5% of reservations ended in cancellation by buyers.
A deliberate block to lower prices?
In the old sector, sales are also down slightly, even if the market remains healthy for the moment. It shouldn’t go as far as blocking either, notes Damien Pacouil, however. When there is inertia in the real estate market, it can take several months to pick up again.
For her part, Ccile Roquelaure wants to be confident about the situation over the next few months: There are banks returning from vacation and reopen the floodgates of real estate credit. The establishments have passed the summer, they are now in the last period of loan production for the year 2022. Because if historically, the banks tend to accept fewer files in the summer, period during which they operate with reduced staff, real estate loans remain a very attractive product for them.
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Banking establishments could therefore let go of some ballast. Hard to believe, however, change in wear rate calculation, which would give a real breath of fresh air to banks and borrowers alike. As for the Banque de France, it is estimated that the production of housing loans is beginning to gradually normalize but remains above the monthly averages of recent years. For an expert in the sector, this desire not to touch the rate of wear and tear is explained by the fact that the government wishes to control the production of real estate credit in order to influence the price of real estate. The usury rate is a godsend for the government. A risky bet, as the equation of rising rates = falling prices is far from certain.
Bercy, however, assures Echoes monitor with the greatest vigilance the evolution of rates and the conditions of access to real estate credit, in conjunction with the Banque de France and all the players concerned. If usury rates prove to hinder access to credit, the Minister could, on the recommendation of the Governor of the Banque de France, make adjustments.
Real estate loan: find the best rate