As of February 1, the calculation of the maximum rate at which you can borrow from a bank will be updated every month. The goal: to make it easier for some borrowers to obtain credit. The other side of the coin: real estate rates could climb even faster than today.
For many borrowers, it’s a relief after weeks or even months of tearing their hair out trying to get a mortgage. Because the rate of wear, level above which a bank cannot lend, will be reviewed every month from February 1st until July 1st.
Until now, this all-inclusive rate of a mortgage loan, which includes the interest rate, borrower’s insurance and various bank charges, was only changed once a quarter. Currently set at 3.57% since January 1 for loans of 20 years and over (3.53% for a loan between 10 and 20 years), it will therefore be revised every month, in order to maintain the objective of protecting borrowers that has the usury rate, while avoiding a situation where it would become a rationing factor of the supply of credit, explains the Minister of the Economy.
Easier grants, but higher rates
This measure is likely to make a credit market more fluid become seriously dysfunctional, congratulates the broker Cafpi in a press release. Since June 2022, in fact, the delays in adjusting the usury rate had forced many banks to drastically limit their mortgage production, as evidenced by the 43% drop announced by Crdit Logement for the 4th quarter of 2022 .
Faced with the impossibility of raising their rates sufficiently while 10-year OATs (the French government borrowing rate indicator, which serves as a benchmark for changes in the credit market in France, Ed) continued to increase, many banking establishments had in fact decided to withdraw from mortgage lending. But then, what can we now expect? Banks will be able to price credit at its fair price, and therefore start lending again or lend more. Better a credit a little more expensive but a credit, assures Ccile Roquelaure, spokesperson for the broker Empruntis.
This monthly payment of the wear rate is likely to contribute to the acceleration of the recovery credit rates that could reach 4% over 20 years as of this summerconfirms Julie Bachet, managing director of Vousfinancer, while considering that borrowing at 4% with inflation at 6% remains a good operation, more so than not being able to obtain a loan and give up on your real estate project.
Real estate credit: find out the lowest rates for your project
The biggest increases are behind us
While the average rate of a 20-year loan has already increased from 1% in February 2022 to 2.63% in January 2023, the biggest increases are behind us, for his part, wants to believe Mal Bernier, spokesperson for the broker Meilleurtaux. The 10-year OAT is permanently below 3% (2.48% as of January 18, Ed) so credit rates of 4% seem like a lot to me. I think the peak will be around 3.5% in June. The banks will prefer not to increase more than reason to remake real estate credit as a loss leader.
But if the increase in the usury rate will allow banks to reopen the faucet of real estate credit, borrowers hope that real estate prices will fall in the coming months. Because to compensate for the 1% increase in credit rates on the real estate purchasing power of households, it takes a drop of about 7% 8% in the prices of goodsexplains Guy Poyen, the marketing director of Crdit agricole Ile-de-France, in an article published by The world.
But while credit rates have more than doubled in one year, the fall in prices is less: a study by Crédit Agricole on mortgage loans estimated that prices in old properties could fall by 4.8% on average in 2022 and 2% in 2023. One thing is certain, the desire to buy is still very strong among the French, assures Mal Bernier. The reform of the wear rate should therefore allow a majority to make this project a reality.
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