The number of real estate loans started to rise again in France in 2021, after an atypical year 2020, with no marked change in interest rates, which are still advantageous for borrowers, said the CSA / Credit Logement observatory on Thursday. However, the rates have reached a low level according to this same study.
New record. Home loan offers accepted last year reached a total of 190 billion euros (excluding renegotiations, credit buybacks and bridging loans), a provisional figure which already exceeds that of 2019 (189.8 billion).
Requirement [de crdit immobilier] recovered from the beginning of last spring, note the authors of this study, a reference in the sector. Over the whole of 2021, the number of loans granted increased by 4.6% compared to the previous year. This rebound is, however, put into perspective with the heavy fall observed in 2020 due to the health crisis: -18.1%, still according to the Crdit Logement observatory (1) THAT’S IT.
This increase is due to the good health of the property market in France for both new and existing housing, as well as extremely low interest rates. The credit conditions are very good, excellent even, says Michel Mouillart, professor of economics in charge of the presentation of the results of the study. the average loan rate agreements by the private sector was to 1.05% in the fourth quarter of 2021, compared to 1.17% in 2020 and 1.20% in 2019. This same average rate was relatively stable in December, at 1.06% for all credit terms combined, and 1.07% mid-January 2022.
Average rates over 15, 20 and 25 years
- Real estate loan over 15 years: 0.86%
- Loan over 20 years: 0.99%
- Credit over 25 years: 1.13%
The monthly barometer of real estate rates
Why rates bottomed
It’s a floor, continues Michel Mouillart. The rates charged by the banks last year are lowest since early 1950s. In addition, almost all of the rates paid for the whole of 2021 are lower than inflation, unheard of, he points out. Inflation has indeed accelerated significantly in recent months, reaching +2.8% in December over one year, according to INSEE.
The observatory develops in its quarterly barometer several arguments allowing it to anticipate the end of the erosion of real estate rates, without however foreseeing a very sharp rebound. The observatory is based on inflation forecasts around 2.5% in 2022 (according to the Banque de France), on the anticipated stability of the key rates of the European Central Bank until the spring, and on the gradual rise government bond rates to draw the following conclusion: a rise in mortgage rates at the same pace, so slowly, over the next few months.
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Verdict of the Crédit Logement-CSA observatory: In the absence of tightening of the current regulations, the increase in rates would be 20 to 25 basis points, at most, in 2022: the rates would therefore simply return to their average annual level of 2019 in 2022. The average rate turning around 1.05% at the end of 2021, it is therefore expected around 1.25% or 1.30% over the year 2022.
Historically long loan terms
These favorable conditions are also expressed in terms of loan duration. On average 256 months (21 years and 4 months) for a purchase in the new and 252 months (21 years) in the old. A historically long level, the overall average having increased by 9 months compared to that observed in December 2019.
An even more telling figure: more than 60% of loans are granted over terms of more than 20 years, whereas these long terms only represented a little more than a third of loans in 2017. Despite this extension of loan terms , the observatory notes that loans over 25 years have become an extremely small minority following the tightening of the rules preventing banks from lending for more than 25 years.
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(1) Jointly owned by the major French banks, Crdit Logement is a finance company specializing in the guarantee of real estate loans intended for private housing. It bases its analysis on criteria such as the solvency of the borrower or the value of the property. It prides itself on guaranteeing one out of three home loans.