The trend increase in mortgage rates is confirmed week following week. What seriously complicate the life of investors.
They keep on increasing. In his monthly report,Housing Credit Observatory/CSA indicates that the average rates for new mortgages have fallen 1.18% in March to 1.27% in April.
In detail, the average rates, “excluding insurance and cost of securities”, 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 vary from one bank to another. Some are currently choosing to increase them several times a month, others are opting for rarer but more spectacular readjustments.
Why are rates rising?
How is this trend increase in mortgage rates 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 for the broker Empruntis, told us last month. 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.
“Since the outbreak of the war in Ukraine, borrowers with modest or low personal contributions have encountered additional difficulties in accessing credit and the shift in demand towards higher income brackets is increasing”, adds the Observatory Credit Housing / THAT’S IT.
Rates that remain below inflation
So how far might the rate hike go? Hard to predict. “It is possible that we will reach 2% by the end of the year, projected Pierre Chapon, the co-founder of the broker Pretto, interviewed by Midi Libre last month. As for rates at 3 % in the longer term, this is no longer science fiction.”
Anyway, if financing a real estate project is more and more expensive for investorsmortgage rates still remain well below the level of inflation, assessed by INSEE at 4.8% over the last twelve months.
Increase in rates: what impact on the cost of your credit?
For a loan of 170,000 euros made over 20 years, here is the impact of the evolution of the borrowing rate:
- 1% rate :
- Monthly payments excluding insurance: €782
- Cost of credit excluding insurance: €17,637
- Rate of 1.35% :
- Monthly payments excluding insurance: €809
- Cost of credit excluding insurance: €24,077
- 1.5% rate :
- Monthly payments excluding insurance: €820
- Cost of credit excluding insurance: €26,879
- Rate of 1.7% :
- Monthly payments excluding insurance: €836
- Cost of credit excluding insurance: €30,654