Increase your PEL rate in 2023: The best strategy is not to wait until 2023 to sign up, explanations.

Increase your PEL rate in 2023: The best strategy is not to wait until 2023 to sign up, explanations.

PEL rates increase on January 1, 2023

Only the oldest PELs remain attractive for building savings, without necessarily being a borrowing target for a real estate project. Even if the PEL savings rate increases sharply on January 1, 2023, the good savings scheme will not be repeated in the past, since tax (taxable interest) and PEL (lifetime) rules have evolved since then. So the question of the PEL rate increase in 2023 is only about savers who eventually have a real estate project, and who don’t already have an open PEL. It is stated that each person (adult or minor) can only carry one PEL.

What are the PEL prices on January 1, 2023?

PEL rates (those for savings, such as those for tied credit) will rise on January 1, 2023. How much is that? No one knows yet. Everything will depend on the development of market interest rates (oat rates in particular, 10 years and 5 years, from which we draw the short rates at 2 years) in the second half, but this rate is likely to rise sharply, the initial estimate may push the PEL rate Up January 1, 2023 to 2% (currently 1% total).

PEL . saving strategy

In recent years, with mortgage rates at all-time lows, PELs, in their primary function of getting mortgages at preferential rates, have not been without interest. In fact, the current PEL credit rate is 2.2%, and borrowers have found better rates without having to use a PEL. This is still the case today. PEL’s savings rate is currently 1% gross, or 0.7% net, while the rate of credit to be granted at the end of the savings stage can be 2.2% (excluding insurance). However, this situation will change in the coming years.

Interest rates continue to rise

If you expect a sustained rise in interest rates, What should count the most for you is the mortgage rate you can get with a PEL, not the savings-stage pay rate.. As a reminder, the cost of a mortgage is much higher than the amount of interest you will get on your capital. In addition, the banks consider the capital borrowed via PEL as a contribution to your additional mortgage. What is important. Currently, if 20% of mortgage applications are rejected, it is not because the rate offered by the bank exceeds the usury threshold, but simply because the borrowing candidates do not have enough contribution. By getting more contribution, these borrowers can get a mortgage.

Not a higher PEL rate, but a higher PEL rate

To mention the rise in the PEL savings rate only is nonsense. There is no single rate for PEL, but there are two rates: a rate for the savings stage and a rate for the mortgage. Thus, these two rates are related. If the savings rate PEL rises, the primary mortgage rate also rises linearly. Knowing this, the strategy is to wait for a sharp rise in the PEL savings rate for an irrelevant subscription. It’s a bad reaction. Bad advice in most cases. Here’s why.

The increase in the PEL loan rate is the savings rate that has increased by 120 basis points. Thus, a PEL savings rate of 2% would raise the PEL loan rate to 3.2% (excluding insurance). Such a rate, plus the borrower’s insurance cost of 0.4%, will give a credit rate of 3.6%. good plan? Not right. Only if the loan rate is higher than this 3.6% rate.

High PEL rates: What’s the best strategy?

Thus, when we know that PEL rates will rise sharply, as they should be in 2023, we should expect. Thus, in a married couple or PACS, it is appropriate for one of them to get a PEL at the current rate, because the PEL credit rate will be attractive (2.2%). The pair will wait in order to subscribe to the PEL at the new rate, say at 2% in 2023. The pair will provide as a priority in the PEL with a high saving rate. After at least 4 years, the couple will move to Transfer of loan rights from PEL at new rates to PEL at old rates. Thus, if the savings placed on the PEL benefit from an attractive savings rate of return, the amount of interest generated will still be possible to borrow on attractive financial terms (2.2% or instead of 3.2% for example). It’s a double win effect! The high savings rate of 2023 would have generated more interest (loan rights) than the old 2022 PEL, which makes it possible to borrow more capital at the 2022 PEL credit rate, having previously implemented this conversion of loan rights. Therefore, both PELs are absolutely essential, so waiting until 2023 before signing up is not good advice. You need to find a family member to set up your mortgage project (the list of people who are authorized to transfer their loan rights to you is given below).

The holder of a housing savings plan (PEL) can assign rights to his loans, but only to specific beneficiaries: their spouses or close family members of their spouse, or their close family members (assets, grandchildren, collateral).

The advantage of this strategy of opening several PELs, as a family, before and after the rise in PEL rates also makes it possible to limit risks according to various possible changes in interest rates. Then it is sufficient to reconcile the transfer of rights to loans. Nobody can actually predict that interest rates won’t collapse in 2024. Right now it sounds crazy, but who knows?

loan rights

You can assign your loan rights to a member of your family, provided that he or she has held an open PEL for at least 3 years. Likewise, a member of your family can assign to you the loan rights created by their PEL. You can combine his rights with your own and thus get a loan of a higher amount. The following are your family members to whom you can assign your loan rights or from whom you can obtain loan rights:

  • your husband/wife
  • Your children or your spouse’s children
  • Your grandchildren or your spouse’s grandchildren
  • Your parents or your spouse’s parents
  • Your grandparents or your spouse’s grandparents
  • Your brothers and their husbands or your husband’s brothers
  • Your nieces and nephews or your nephews and husbands
  • Your uncles and aunts or your husband’s uncles and aunts

PEL: savings stage

PEL: savings stage

The savings stage of a housing savings plan entitles you to the interest and premiums paid by the state. The loan amount depends on the interest earned in the housing savings plan. Amounts saved for the life of the loan are frozen in the housing provision plan.

Deposits and term of PEL:

  • Minimum saving period: 4 Years
  • Minimum deposit when opening PEL: 225 EUR
  • Minimum annual deposit in PEL: 540 EUR annually
  • Payment limit on PEL: €61,200

The two-year seniority of PEL only allows you to benefit from the rate without any penalty.

⚠️ be careful : Failure to pay the minimum annual amount of €540 may result in the automatic closure of your PEL by your bank. You should also not pour too much on the PEL, eg too close to the ceiling, In order to be able to continue to pay the minimum each year.

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