2024-01-18 20:21:53
The increase in the rate of real estate loans, which is at its highest level since 2009, is largely linked to that of the rates of the ECB, which intends to fight once morest inflation.
The average rate of real estate loans reached a plateau at 4.20% in the fourth quarter of 2023, the highest since 2009, while the number of loans granted continued to fall, according to calculations by the CSA/Crédit Logement Observatory published THURSDAY. Over the whole of 2023, the average rate reached 3.59% according to the same source. Although it is slowing down, the increase in the average rate on real estate loans has been spectacular since spring 2022, when it was still barely above 1%.
The European Central Bank’s (ECB) rate hike to counter inflation increased the cost of money for banks, which passed it on to their customers to maintain their margins. The figures announced each month by Crédit Logement differ from those of the Banque de France, with 4.24% and 4.11% respectively in December.
The central bank’s statistics have the merit of covering the entire market, unlike those of Crédit Logement, the result of restatement on the basis of partial data. These rates are enough to discourage candidates for purchasing a home, especially since some banks have lent less and prices have not fallen quickly. In the fourth quarter of 2023, the average duration of loans granted was 248 months, or 20 years and 8 months, “a level rarely observed in the past» according to the Observatory, which recalls that it was 13.6 years in 2001 and 17.1 years in 2014.
A “slow” decline in rates
During the autumn, the stabilization of ECB rates and the slight increase in the cost of savings resources enabled a significant improvement in bank profitability. Credit market activity benefited: but the expected impact was attenuated by the deterioration in the solvency of demand caused by the increase in credit rates, he observes. In 2023, credit production – the amounts lent – fell by 41.7%. The number of loans fell by 39.5% over the year.
The decline slowed in the fourth quarter, with -30.6% and -19.5% respectively. The reduction in property loan rates will be “spring», according to the Observatory which predicts “a decreasing trend, at a relatively regular pace throughout the year» 2024, from 4.20% in the first quarter to 3.25% in the fourth (with an average rate of 3.60% over the year). “Then the drop in rates would continue in 2025», at 3.10% on average.
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