Mortgage interest rates have not stopped rising since the beginning of 2022 and they are not about to stop. European monetary policy to curb inflation makes money more expensive, but rates are still doing well. The reason: the level of usury prevents banks from exceeding the price hike at will. Borrowing terms are always favorable, but you still have to reach them.
Another price hike in July
The interest rate hike started in January 2022 and put an end to it Two years of land valuesthe lowest point was reached in October with a Average rate for all periods combined at 1.03% According to data from the Crédit Logement Observatory (excluding Home loan insurance cost and warranty cost).
This upward movement was inevitable, and prices were not intended to drop further. These low values were a abnormality Just Unprecedented monetary conditions Allowed for several months: almost zero inflation, a bond yield of about 0% or even negative, and an interbank refinancing rate of 0% as well.
What surprised is the brutality of this development. Within 6 months, interest rates rose by More than 60 basis points Throughout all periods. In January 2022, the average price over 20 years was still shown about 1% ; in July at 1.70%. And whoever says average says Big gap between premium profiles and othersThose who cannot take advantage of the best offers and those who pay the highest rates due to modest income andpersonal contribution minus. For many borrowers, the 20-year average is more about 2%, so it’s higher.
What are the rates at the end of 2022?
Money is expensive! He said the song. forget that rate of 2% or even 3% normal. Prior to 2012, crude oil rates were around 4%. Then it started pulling back, punctuating a few thin bullish rallies, before hitting lows in the last three quarters of 2021.
Mortgage candidates used to Historically low rates for more than three years. The recent change forces us to recognize exceptional personality Financing terms that have prevailed since 2016. This Back to normal Yet annoying and punishing for purchasing power When the Getting into debt for many years. Moving from a nominal rate of 1% to 2% makes a mortgage loan of €200,000 over 20 years more expensive by €22,075 in interest alone! But we get into cheap debt, with Negative real inflation-adjusted rates.
High prices echo Tensions are escalating in all financial markets Since the outbreak of war in Ukraine on February 24. L ‘inflation Bites up every month (+5.8% in one year at the end of June) andFrench government bond loan for 10 yearsthe indicator banks use to determine fixed mortgage rates, served investors more than 2% in June, compared to 0% at the end of 2021. It has since fallen to about 1.50%.
Add to these factors ECB rate hike last July 21. To counter inflationary drift, the European Central Bank is responsible for 50 points all main prices Including the interbank refinancing rate which ranges from 0% to 0.50%.
The The interest rate hike will continue. Experts agree that borrowing rates will go away continue their progress. Over 20 years, the average rate should be fast up to 2%. The faster the promoters of real estate projects apply for financing, the better the terms of the loan offer. Subject to the ability to take advantage of it. L ‘Get a mortgage In fact, not because of high interest rates, but because systems.
Banks caught in usury
Banks welcome the ECB’s decision to raise interest rates and should therefore be able to lend at more comfortable margins. But the equation is not simple, because the mortgage shave with wear, which is a consumer protection system against potentially abusive banking rates. Enterprises cannot pass the rate increase in full, as it is Limited rates of wear.
wear rate is April (global effective annual rate) the maximum that banks must under no circumstances exceed to grant a mortgage, they act a Gradual increase in their scales If they want to keep lending. However, the margin between the proposed overall rate and the rate of wear during the respective period is reduced to a minimum, and it is struggling to Enter all other credit related fees (File fee, warranty, Borrower insurance). For loans of 20 years or more, the erosion rate was set at 2.57% in the third quarter of 2022, compared to 2.40% in the previous quarter.
Unless you submit a file Personal contribution equivalent to 20% of the process, a comfortable income, significant savings remaining and being in good health to take advantage of the borrower’s insurance at preferential rates, negotiation is difficult. To maximize their customers’ chances of accessing credit, some banks withdraw part of the cost ofTAEG Borrower InsuranceThis is in violation of the regulations imposed by the Supreme Council for Financial Stability. This practice contributes to a lower average annual interest rate, thus fueling Very slow progression of wear rates. It’s the cat biting its tail!