Real estate loans: always exceptional borrowing conditions
The decline in credit rates continues in May. France is also distinguished by particularly low rates compared to other European countries and a high overall amount of credit. These factors facilitate homeownership, especially for first-time homebuyers.
May is still favorable for buyers. Mortgage rates are falling thanks to fierce competition between banks and borrowing times are growing. These low rates boost the purchasing power of French households.
Mortgages: further rate cuts in May 2018
Compared to early April, mortgage rates are 0.05% lower, reports the broker Meilleurtaux. Direct Loan notes a slight decrease in credit rates according to the scales received by banks in early May. YouFinance finally announced declines of 0.10 to 0.20% depending on the duration. While the May rate decline is still modest, it confirms a strong trend.
Indeed, since the end of summer 2017, interest rates are falling gradually, of the order of one basis point each month, notes the Housing Credit Observatory / CSA. Over 20 years, these rates stand at 1.65% for Empruntis and 1.60% for Meilleurtaux and VousFinancer, for example. These new decreases are mainly explained by the still fierce competition between credit institutions. The latter display significant discounts according to customer profiles. Very good records manage to win a gross average rate of 1.50 or 1.40% over 20 years.
France: the European country with the biggest rise in mortgage
Since 2015, the amounts of loans granted by banks to individuals have steadily increased. In 2017, the French indebted to the tune of 270 billion euros against 250 billion the previous year, according to figures published by the Bank of France.
A recent study published by Credit Forter with the firm Asterès shows that outstanding mortgage loans increased by 6% in France at the end of 2017, over one year, to reach 984 billion euros. This figure represents nearly 15% of the total outstanding amounts of all the countries of the European Union. France is thus in third place behind the United Kingdom (1,360 billion euros outstanding) and Germany (1,175 billion euros). These three countries alone account for 55% of outstanding mortgage loans in Europe. The progress posted by France is however much higher than the average increase of the 28 European countries.
Heavy use of real estate loans, especially for first-time buyers
We must first point out that 87% of first-time buyers use the mortgage, as indicated by the 4 th edition of the study OptimHome / Ifop that dissects the reports of the French real estate. This is also the case for 54% of people with monthly net income of less than € 1,200 and 90% of those with monthly net income above € 4,000.
Current borrowing conditions remain favorable to first-time buyers who can realize their real estate project through the extension of the term of loans despite higher interest. Since early 2018, the average loan term has been 219 months, nearly 18 years. The Crédit Logement Observatory states that it has increased by 15 months since the beginning of 2014. In strained areas, the rise in property prices, the abolition of personal assistance for home ownership (APL) and the refocusing of Zero-rate loans (PTZ), however, penalize these buyers.
Always ideal conditions to renegotiate his mortgage
Those who wish to renegotiate their mortgage can also take advantage of these favorable conditions. Remember, since the introduction of annual termination principle on 1 January 2018, it is also possible to renegotiate its loan insurance on each anniversary date of the contract, the latter of up to 50% of the total cost of credit.
Thus, the conditions for borrowing or renegotiating a home loan remain very interesting. Buyers have every reason to benefit because a slow and gradual rise in interest rates could be observed by 2020. The evolution of inflation will be decisive. The Housing Credit / CSA Observatory states that it should be between 1.3 and 1.6% in 2018 to accelerate in 2020, around 1.8%. Mortgage rates should end the year between 1.65 and 1.70% maximum, he adds.
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