Bad news for those looking for a loan to finance a real estate purchasethe interest rate increase is confirmed.
At the broker Pretto, real estate rates therefore rose by an average of 20 basis points over a month: “Our estimate is 1.34% over 15 years, 1.44% over 20 years and 1.58% over 25 years. For the best profiles, the possibility of borrowing below 1% is getting further and further away: 1.18% in fifteen years, 1.29% in twenty years and 1.44% in twenty-five years.” says the broker.
The trend is general. “The rates will continue to rise in the coming weeks. A national bank last week announced an increase in its scale from 20 to 25 centimes.” says Cécile Roquelaure, director of studies at Empruntis. On the scales received and in effect in April, this broker is recording increases in nine out of ten cases.
These vary between 10 and 30 basis points, depending on the institution and the maturity. Currently, the 20-year average interest rate is 1.35%, an increase of 35 basis points since the start of the year. Over the same period, the lowest rate is reserved for the best profiles, as in March, at 0.90%.
“Banks pass on the increase in their refinancing costs heterogeneously”, notes Cécile Roquelaure. The interest on OATs (treasury-equated bonds), the traditional measure of real estate rates, has risen about 70 cents since the beginning of the year. “Two strategies are being observed: either the banks have made a major hike all at once and maintain their rates for the time being, or they prefer a rise in stages of 10 to 15 cents while remaining vigilant for new developments.”she believes.
Rates above 2%
At Vousfinancer, the rate increases for all bank scales received range from 10 to 45 basis points. This broker notes that these increases usually affect all profiles, but at certain banks more the less good profiles, with the lowest incomes, to whom we now sometimes offer rates of more than 2% over twenty and twenty-five years … For example, at Vousfinancer, the average rates offered in April to 1.25% over fifteen years, 1.45% over twenty years and 1.65% over twenty-five years. The rates for the best profiles are also rising, but remain attractive: 0.90% over fifteen years, 1% over twenty years and 1.25% over twenty-five years.
“The 10-year borrowing rate has returned to April 2017 levels, when banks lent on average 1.70% over 20 years, compared to 1.45% today. The banks are trying to limit the interest rate rise as much as possible or to make it as gradual as possible, by sending new scales for some every two weeks, with limited increases. In this context, however, the movement is likely to continue in the coming weeks, even if the rates displayed on certain scales with the current wear rates are systematically leading to refusals.” analysis Sandrine Allonier, study director at Vousfinancer.
“At the same time, wear rates have been revised slightly downwards, which is not necessarily good news”underlines Ludovic Huzieux, co-founder of Artémis brokerage, which, according to the banking institutions, noted a rise in interest rates in April of between 20 and 40 basis points.
The usurious interest rates (which vary according to the type of loan and which are calculated quarterly by the Banque de France) correspond to the maximum levels at which banks are allowed to lend. In practice this concerns the interest, death and disability insurance, the guarantee, but also administration and brokerage costs.
These rates fell slightly for home loans in 1er April, for fixed rate loans of twenty years or more, from 2.41% to 2.40%. The very low level of usurious interest rates threatens to close the door to lending for certain candidates. † If increases continue this quarter at the same rate as in recent months, property rates will be very close to the trend, de facto foreclosure of many households warns Pierre Chapon, president of Pretto.
Tighter credit conditions are already weighing on the property market. Pretto notes a 16% drop in purchase plans between February and March 2022. The Banque de France’s advanced estimate for March shows a slight decline in monthly CVS home loan production (23.2 billion euros) compared to February .
“Despite a promising start to the year in the real estate market, since February 24, the Russia-led war in Ukraine blows a wind of pessimism on the French real estate market, and more generally on the economic situation of France”, Ludovic Huzieux stated on March 23 during the presentation of the Artémis real estate barometer on French real estate and real estate.
† In realityhe went on, this new study finds that 73% of French people are pessimistic about the economic situation in France, feeling 9 points higher than in September 2021, and a majority of French people consider the current situation unfavorable for borrowing (52%, + 11 points vs September 2021). † And since then, the situation has probably worsened.