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Mortgage interest rate rise: what is the current trend and what developments can be expected?

The trend increase in mortgage rates is confirmed week after week. Which seriously complicates the life of investors.

They keep increasing. In his monthly reportHousing Observatory/CSA indicates that average rates for new mortgages have fallen 1.18% in March to 1.27% in April.

In detail, average rates, “excluding insurance and securities costs”, rose to 1.12% over 15 years (1.01% in March), 1.25% over 20 years (1.13% in March) and 1. .37% (1.25%) over 25 years.

In fact, the rates differ from bank to bank. Some currently choose to increase them several times a month, others opt for rarer but more spectacular adjustments.

Why are the rates rising?

How can this trend increase in mortgage interest rates be justified? First and foremostmoney has become more expensive for banks in recent months† “Government bonds have exploded and this is affecting loans,” Cécile Roquelaure, director of studies at the broker Empruntis, said last month. In addition, the European Central Bank has announced it wants to raise its rates. So we are only at the beginning of a cycle.

“Since the outbreak of the war in Ukraine, borrowers with modest or low personal contributions have faced additional difficulties in obtaining credit and the shift in demand towards higher income groups is increasing,” adds the Credit Housing Observatory / THAT’S IT.

Rates that stay below inflation

How far can the rate hike go? Hard to predict. “We may reach 2% by the end of the year, predicted Pierre Chapon, the co-founder of the brokerage Pretto, who was interviewed by Midi Libre last month. As for longer-term rates of 3%, this is no longer science fiction.”

Anyway, if financing a real estate project becomes more and more expensive for investorsMortgage rates still well below inflation, assessed by INSEE at 4.8% in the past twelve months.

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