2023-10-27 16:00:28
(Photo credit: © Sommart – stock.adobe.com)
With interest rates around 4.5%, owning a property is becoming more and more expensive. A difficult situation for borrowers, but which some good news tempers.
Do you want to buy an apartment or a house? The rise in interest rates cannot have escaped your notice. In the space of a year and a half, credit conditions increased from 1% to 4.5%. Households who want to become homeowners therefore have more and more difficulty achieving their dream, and sometimes even have to give up, at least temporarily, their real estate purchase project. But behind the clouds, a few rays of sunlight persist. Discover the panorama of good and bad news on the real estate loan market.
A real estate loan market that complicates access to property…
For a year and a half, the rise in interest rates so feared by future owners has indeed been here. We must now count on an average rate of 4.5%, all durations combined, compared to 1% 18 months ago. An increase in rates which results in a reduction in the borrowing capacity of households. According to Meilleurtaux, it is necessary to earn 30% more currently to obtain a loan of 200,000 euros over a period of 20 years, compared to January 2022.
In its 38th real estate credit observatory, Meilleurtaux reveals that between January 2022 and October 2023, the borrowing capacity of a household earning 4,000 euros net per month fell by 70,000 euros. In other words, with identical income between 2022 and 2023, a household that wishes to become the owner of an apartment or a house will have to do so with several tens of thousands of euros less in real estate loan.
Let us also remember that the household debt rate is capped by the High Financial Stability Council (HCSF) at 35%, insurance included. However, according to Meilleurtaux, less than 6 out of 10 real estate credit files are below this threshold in October 2023. “A third are between 35 and 39% and almost 10% exceed 40% debt”. So many households who have very little chance of being granted bank financing for their real estate purchase project.
Read also: Real estate loan: are the good days of the zero-rate loan numbered?
… but which also offers good news to borrowers
Until now, the HCSF has not expressed a desire to revise the 35% debt ratio rule which, as a reminder, aims to protect individuals from excessive debt. However, the Court of Cassation very recently considered that the risk of over-indebtedness was not characterized when a couple’s remaining life was greater than 3,000 euros, and many voices are being heard in favor of a relaxation of this granting condition.
If such a change remains purely hypothetical, the real estate loan market is nevertheless experiencing some good and very real news. This is the case for interest rates. If, on average, you have to count on a rate of 4.5%, it is entirely possible to obtain a better rate. The best profiles, whose income and/or contribution are among the highest for example, can thus claim a rate of 4% according to figures from Meilleurtaux.
Banks are also reconnecting with their margins, as Mael Bernier, communications director at Meilleurtaux, explains: “Since February 2023, the gap between the refinancing rate and the real estate loan rate has once once more become more favorable to bank margins.” For borrowers, this means that banks will be able to fully return to the market, and thus grant more real estate loans, at better conditions.
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