How are mortgage rates doing for the start of 2022? (Credits: © Monster Ztudio – stock.adobe.com)
The context of low rates experienced by borrowers in 2021 might well continue in 2022. In any case, this is what the first figures for the year suggest.
By MoneyVox,
In 2021, mortgage interest rates still marked the spirits, with loans sometimes granted at less than 1%. But in 2022, the banks will have to be more selective on the files and apply to the letter the decisions of the High Council for Financial Stability (HCSF). With rare exceptions, borrowers will no longer be able to exceed a term of 25 years and a debt ratio of 35%. News that raised fears of an interest rate hike… but the first data for January 2022 are intended to be reassuring.
An exceptional context for borrowing in 2021…
It is now usual for all real estate buyers: interest rates on loans have been extremely low for several years. But the year 2021 still managed to make an impression with interest rates that fell below 1%. A privilege reserved for households with the best profile: those with a high level of income, a low debt ratio, a substantial contribution, a significant amount of residual savings (following the purchase of real estate), and/or prospects professional development in the more or less long term.
In addition, the year 2021 also benefited from a wide distribution of mortgages, in particular to first-time buyers. The recommendations of the High Council for Financial Stability in terms of loan duration and debt ratio were still only recommendations. But from January 1, 2022, these have been transformed into bonds, raising fears of a tightening of the granting conditions this year.
… which should continue in 2022, with some nuances
Only a handful of files will be able to escape the new rules of the HCSF. The others will have to comply, both on the maximum borrowing period of 25 years and on the debt ratio of 35%, insurance included, not to be exceeded. This context might disadvantage the most modest households, those buying their main residence for the first time, or even small investors in rental real estate. If the banks retain a little leeway, it is likely that they will use it above all for the best profiles, raising fears of more difficult access to mortgages.
On the other hand, the year 2022 should continue on the same dynamic as 2021 concerning interest rates. Indeed, the first scales were published by brokers and banks at the start of 2022. Over 15 years, average rates range from 0.75 to 1% according to data collected by Pretto, Vousfinancer, Le -Partner, Borrowing-direct and Borrowing. Over 20 years, we can expect conditions varying between 0.91 and 1.15%, and over 25 years between 1.10 and 1.40%.
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Banks snap up the best profiles
The figures given above do not concern the best profiles: the luckiest households will be able to claim interest rates of less than 1%, regardless of the duration of the loan. According to Vousfinancer, it is possible to obtain 0.55% over 15 years, 0.75% over 20 years and 0.95% over 25 years. What significantly reduce the overall cost of its mortgage and its monthly payments, or borrow more.
If the banks are so aggressive in terms of rates, it is above all because of the unbridled competition that exists between the different establishments. To capture new customers, the mortgage is an essential product. Very often, the granting of the best borrowing conditions is also conditional on the domiciliation of household income. Julie Bachet, Managing Director of Vousfinancer, testifies to another important variable: “most banks have credit production targets equivalent to 2021, which is a record year. (…) In 2022, they should maintain a strategy of offensive rate in a context of ever-strong interbank competition”.
