Historically low interest rates, non-contributory purchases and flexible debt regulation, the real estate sector is coming off some good years. But in recent months, everything has changed and it is becoming increasingly difficult for some households to get a loan to buy a home. The End of Easy Credit?
Is it the right time to buy? This is the question asked by anyone looking for a home. And the period is undoubtedly particularly conducive to interrogation. For several months, credit rates, which have remained historically low for a long time, have been rising again. And not just a little.
An upward trend that can no longer be ignored
“On January 1, 2022, we had an average interest rate of 1% for a loan over 20 years, recalls Cécile Roquelaure, director of studies at the real estate agency Empruntis. Today we are at 1.35% and it is not unlikely that we will make it. 1.5% for the summer. The rates vary according to the banks. Some decide on small increases every week, others adjust less often but in a more spectacular way.”
Because the bullish momentum must continue. Several reasons can explain this. Firstly, the increase in the cost of money for banks. “Government loans have exploded and this has consequences for lending, Cécile Roquelaure indicates. In addition, the European Central Bank has announced that it wants to increase its rates. We are therefore only at the beginning of a cycle.”
“For buyers who were on the limit, it’s the axe”
How far can the rate hike go? Hard to predict. “It is possible that we will reach 2% by the end of the year, predicts Pierre Chapon, co-founder of the broker Pretto. As for longer-term rates of 3%, it is no longer science fiction.”
If, according to credit experts, the situation remains very favorable to buy, it could nevertheless become complicated for first-time buyers and households with the most vulnerable finances. “Loans without contribution are rarer and the amount requested by banks has increased by about 10% in recent months, emphasizes Pierre Chapon. Above all, the debt ratio is now mandatorily limited to 35%. So far it was a recommendation, but today the banks have less flexibility. For buyers who were at the limit, it’s the ax.”
Towards a fall in real estate prices?
In a context of sharply rising prices, the dynamics of the real estate market could therefore slow down in the coming months. “The sector operates in cycles, explains Pierre Chapon. In general, when credit rates are low, prices rise. When they rise, the value of goods stabilizes or falls slightly.”
Nothing to fear, however, for those who have the means to buy. “The situation has gone from idyllic to very good, Cécile Roquelaure believes. The banks have a very ambitious policy to bring in new customers. And for them, mortgage loans are the best way to get them back. And although the interest on lending has risen, they are still well below inflation, so borrowing is still an interesting operation.”
Rate increase: what impact on the cost of your credit?
For a loan of 170,000 euros over 20 years, here is the impact of the evolution of the borrowing rate:
- 1% rate †
- Monthly charges excluding insurance: €782
- Credit costs excluding insurance: € 17,637
- Rate of 1.35% †
- Monthly charges excluding insurance: € 809
- Credit costs excluding insurance: € 24,077
- 1.5% rate †
- Monthly charges excluding insurance: €820
- Credit costs excluding insurance: € 26,879
- Rate of 1.7% †
- Monthly charges excluding insurance: €836
- Credit costs excluding insurance: € 30,654