2021 was a good year for all home buyers. In fact, the real estate market situation has been very favorable, with historically low credit rates.
” Last year more than 270 billion loans were negotiated in France, an absolute record ‘, explains to Special Olivier Lendrevie, President of Cafpi, a mortgage and credit purchase brokerage, headquartered in Sainte-Geneviève-des-Bois, Essonne.
This is explained in particular by the strong interest of buyers in the stone, both in primary and secondary residences and in rental investment housing. Extremely low interest rates boosted demand and made a large number of buyers more solvent.
During the summer of 2021, borrowers with a good financing history can easily take advantage of lower credit, at 0.8% over 20 years. according to coffeeThe average rate granted to investors in 2021 was 0.77% for a loan over 10 years; 0.93% over 15 years; 1.10% over 20 years and 1.42% over 25 years.
Credit rates on the rise in 2022
In 2022, the situation is likely to be the opposite, and the year is expected to be more complex for investors. Indeed, the increase in loans has taken hold since the beginning of the year.
For example, in April 2022, online broker Pretto recorded an increase in mortgage rates20 points on average. Loans over 20 years are taken at 1.44% and loans over 25 years are taken at 1.58%.
As for usury rates (the maximum rates at which families can borrow), they are at a very low level in the second quarter of 2022. This risks excluding less affluent families from the real estate market and, in aggregate, making real estate more difficult for all buyers to access.
The usury rates correspond to a tool developed by the Bank of France, which acts as a firewall against household over-indebtedness.
It is equivalent to the annual percentage ceiling (APR), which is the benchmark for mortgages. They include interest on the loan, credit insurance, as well as administrative costs, guarantees, and possibly brokerage costs.
The erosion rate is an indicator after which banks are prohibited from lending. The method for calculating it is simple: the average rates charged by banks during the previous quarter, plus a third.
Wear rates no longer match the market
However, it appears that in 2022, usury rates are no longer in line with market realities, due to the way they are calculated which generates a lag in relation to the mortgage rate. Thus, over the 20-plus years, the most common credit period, erosion rates have decreased by 20 points in one year, while credit rates have increased by 20 points in one year.
This gap between declining interest rates and credit increasing rates weakens a large number of borrowers, some simply will not be able to borrow, and therefore they see their home buying project collapse.