La Centrale de Financement publishes its gauge for June, and while this trend has been observed since the beginning of the year, it is unsurprising that rates have risen again over the past month.
The rise in property prices continues into the second quarter of 2022. While this trend has been observed since the beginning of the year, these rates have seen another increase over the past month. This phenomenon is explained by the increase in the 10-year OAT rate at the beginning of May: the interest rate on French state loans over 10 years, from 1.5% in May, has not been very high since 2014. In addition, current inflation helps explain higher rates Real estate, due to supply difficulties associated not only with the Covid-19 crisis, but also with the war in Ukraine.
An increase that affects all profiles
The constant rise in credit rates, which has been observed since the beginning of 2022, affects all personal profiles of the borrower. Fully generalized, it also affects all loan terms. Besides the inertia of usury rates, access to credit is restricted to borrowers with a fragile profile, i.e. often those with little personal contribution. So some families are excluded from the market: this is the “scissors effect”.
June 2022: Increase in interest rates on all loan terms
The significant rise in mortgage rates on all terms of the loan was maintained in June 2022. Thus, with the rates announced this month, a borrower who takes out a loan of 180,000 euros over 20 years at 1.45% will increase his monthly payments to 864.36 euros at a credit cost A total of 27,446.40 euros, compared to 17,520 euros in January, an increase of 56.74%, which corresponds to an increase of 9,936 euros for a loan of the same duration and the same amount.
Average property prices for June 2021 by loan term
The generally observed interest rate terms have increased by 0.515%, on average since the beginning of the year, for all loan terms combined. Thus, households benefit from less advantageous borrowing conditions than those of January. In detail: The largest increase in credit rates is observed for loans obtained over 7 years, an increase of 0.57% compared to January 2022. For 12 and 15-year loan terms, the increase in rates is 0.52% compared to the beginning of the year for contracted loans For 20 years, 0.51%, for those contracting for 10 years, 0.49%, for those contracting for 25 years, 0.48%.
The generally observed interest rate terms are up 0.025%, on average, since last month, for all loan terms combined. So households benefit from less favorable borrowing conditions than they were in May. In detail: The largest increase in credit rates for contracted loans was observed over 7 years, an increase of 0.08% compared to May. For 25-year loan terms, the rate of increase is 0.06% compared to the previous month, and for 12-year contracted loans it is 0.01%. Credit rates applicable to loans taken over 10, 15 and 20 years have remained stable from month to month.
Best real estate prices for June 2022 according to loan term
According to La Centrale du Financement, the best prices obtained in June 2022 were 0.326%, on average, higher than those obtained at the beginning of the year. Thus, households benefit from less advantageous borrowing conditions than those of January. In detail: The largest increase in the best credit rate was observed for contracted loans over 7 years, an increase of 0.45% compared to January 2022. For a 20-year loan period, the increase in rates was 0.40% compared to the beginning of the year for loans contracted over 25 years A year 0.39% and for loans contracted for more than 12 years 0.30% and finally for loans contracted over 10 and 12 years 0.21%.
The best prices obtained in March 2022 are down 0.003%, on average, from those obtained in the previous month. So families benefit from more advantageous borrowing terms than they did in May, but not over all loan periods. In detail: The only increases in the best credit rate observed are for loans contracted over 12 years, an increase of 0.6% compared to May, and loans contracted over 25 years, an increase of 0.05%. For 20 years, the rate has remained constant from month to month. A decrease was observed in the rates of loans contracted over 7 and 10 years with a decrease of 0.04% and also for loans contracted over 15 years with a decrease of 0.05%.