the rise in credit rates undermines the purchasing power of buyers

Property for sale, in La Bassée (North), in January 2012.

Every week or fortnight the banks adjust their mortgage scales, in sprints of 0.05 point, from 1% in January to 1.35% at the beginning of April. And it’s not over yet, because they haven’t finished passing on the rise in key interest rates in financial markets, such as the 10-year OAT (for assimilated government bonds), still negative at the end of 2021 and now at 1.009 after a increase to 1,077 on March 30, the highest since 2017.

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A first effect is the reduction of borrowing capacity: for a monthly payment of 1,000 euros, a credit rate from 1% to 1.35% corresponds to a reduction in the amount borrowed by slightly more than 7,000 euros, from 217,441 euros to 210,226 euros. In other words, borrowing 200,000 euros, over twenty years, at the new rate, makes each monthly payment 30 euros more expensive, from 920 to 950 euros. “Thirty euros more per month, this may seem anecdotal, but if you are just at the limit of the maximum allowable debt, today 35% of the income, it can get stuck”says Cécile Roquelaure, director of communications and marketing at Empruntis, credit broker.

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Because the banks study every file in detail and can refuse if there is the slightest doubt that might arise from the presence of other credits, unauthorized overdrafts or the suspicion of gambling. “It is better to clean your accounts before submitting a request”, advise Mme Roquelaure.

The professional situation is, as always, an important criterion, without forgetting the future costs of transport, heating or works, especially in case of poor energy performance of the coveted property. Thus, between the continuous rise in house prices and the rise in the cost of credit, purchasing power is under attack from all sides.

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According to Meilleurtaux, between 2017 and 2022, for an equal monthly amount of 1,000 euros, potential buyers lost 36 million euros in Angers, for example.2from 96 to 60 m2, the French record; 16m2 in Rennes, 14m2 in Toulouse… In Paris the loss is limited to 4 m2from 23 to 19 m2while in only two cities (Le Mans and Nîmes) purchasing power increased during this period.

Under these conditions, two categories of borrowers are penalized: first-time buyers, the most vulnerable and exposed customers and investors.

The credit tap threatens to stall in the second quarter, as bankers are not allowed to charge more than the fixed interest rate until June, according to the average of loans granted in the previous quarter, namely 2.40%. However, to the basic rate of 1.35%, insurance costs are added, between 0.10% and 0.40%, file, brokerage, the accumulation of which risks that the total effective rate exceeds this wear rate, causing the file to be blocked .

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