Mortgage loan: "18% of files financed in 2021 will not be bankable", Pierre Chabon - MySweetimmo

Mortgage loan: “18% of files financed in 2021 will not be bankable”, Pierre Chabon – MySweetimmo

According to broker Brito, more than 200,000 households will be expelled from their mortgage loans. So what are the solutions for the newly excluded from property access?

The unprecedented upward trend in mortgage rates, coupled with strong regulatory restrictions, is putting pressure on borrowers, especially the most modest, who are more and more likely to be excluded from financing their real estate project. Brito broker sounds the alarm.

An unprecedented boom in the cost of credit driven by the inflationary context

The current increase in rates, driven by the inflationary context, is unprecedented in recent history. Real estate prices rose 0.6 points between January 2022 and June 2022 on our price scale, and we have to go back to the end of 1999 – the beginning of 2000 to notice such a significant price increase in a few months, at a time when rates were at 5-6%: Rise The one the market is currently experiencing is almost 5 times stronger in relative terms!

And everything indicates that this will continue: France’s 10-year borrowing rates have already risen by about two points, although only the rate hike by the European Central Bank has been announced, and it remains ineffective. In fact, the first increase is expected at the July meeting, followed by another increase in September. In addition, inflationary pressures will remain high in the international context that weighs heavily on commodity prices.

In addition to this macroeconomic context, policy decisions reinforce upward pressure on the cost of credit. This is the case with the implementation of the Lemoine Law which, with the end of the medical questionnaire for credits below €200,000, requires the pooling of risks and leads to an increase in insurance rates. 1 . agoVerse In June, some specialists noted an increase of 15 to 25% on the respective contracts.

Attrition rates and HCSF recommendations block the market

At the same time, there is an unprecedented set of restrictions on credit, with limits initially designed to protect consumers, but now preventing an increasing number of real estate projects.

The usury rate is the maximum effective rate at which banks can lend to consumers. It includes the loan price, insurance price and various costs. It is now at its lowest, despite a slight rise in July 2022. Since April 1, 2022, it is at 2.40% for mortgages of 20 years and over, leaving only a narrow funding range possible between average rates and this rate of erosion.

In parallel with the usury rate, another strong restriction has been imposed on banks following the recommendations of the Social Welfare Fund: a restriction on 35% of household income since January. This HCSF initiative was adopted to avoid excessive household debt spurred by low interest rates, and has had a moderating effect on the market since 2020, notably thanks to the easing of the rule in 2021 (moving from 33 to 35% of interest rate cap indebtedness, which has resolving 63,000 families).

As interest rates rise, this constraint will have a much stronger effect in 2022, although the increase in rates will naturally have a cooling effect on credit production.

220,000 files funded in 2021 will not be funded today

According to the broker’s calculations, 18% of the files funded in 2021 will not be bankable in the context of the market in June 2022:

  • Nearly 60,000 files are no longer bankable because they have exceeded the attrition rate;
  • Approximately 160,000 cases can no longer be funded as they were because they have exceeded the maximum debt ratio of 35%.

This eviction is completely uneven: if 18% of files for 2021 are no longer bankable globally, this percentage rises to 30% for families with a monthly income of less than 3,000 euros, while it is only 13% for families who earn more. From 5,000 euros per month.

By re-examining the files we obtained agreement from the banks in 2021, we came to the following conclusions regarding the impact of the current context on the real estate market as a whole: 18% of the files funded in 2021 will be more bankable in the context of the market in June 2022 “analyzes Pierre Chabon, co-founder of Britto.

This situation can have serious economic and social consequences, which is why we are launching this alert today. Making this observation is not enough, so we suggest practical and reliable ways of organizational change so as not to aggravate the “real estate divide” and to preserve credit in all its social benefit.“, Confirms.

What are the solutions for the newly excluded from access to property?

To unlock the market and reduce the real estate divide, Brito offers two suggestions:

  • modification of the corrosion rate calculation methodology to bring it closer to market realities and allow it to better protect the consumer from the risks of eviction;
  • Authorizing an increase in the maximum debt ratio by more than 35% to finance energy efficiency business or acquire high energy efficiency goods.

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