Mortgage Credit: Becoming a Homeowner, a Dream Unattainable for the Most Humble

Mortgage Credit: Becoming a Homeowner, a Dream Unattainable for the Most Humble


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Over the course of several months, mortgage interest rates have skyrocketed, and with them the most humble French people have been strangled. Why does borrowing in order to become a homeowner get so complicated?

by MoneyVox,

Like every quarter, the CSA Housing Credit Monitor has released several numbers that reveal the state of the mortgage market. With the second quarter of 2022 marked by rising real estate interest rates, it’s no surprise that it’s the most modest households who have the most difficulty getting loans. Is it still possible to borrow on a limited budget? Explanations in numbers.

A subtle context for the most humble French

The current context is not suitable for borrowers who have a limited budget to purchase real estate. With an inflation level of +5.8% in one year in June 2022, it is the purchasing power of the French that suffers first and foremost from the general rise in prices. With less space, the most humble families are also the most affected and find it more difficult to make ends meet, to put money aside, and thus be able to make monthly payments. High credit.

At the same time, the war in Ukraine increased the cost of some materials necessary for construction. Timber, metal, plastic… New homebuilders had no choice but to pass on these price increases to their own, with an average +6.4% increase for the sector during the first half of 2022 To deal with this context, three solutions are available to future owners: Borrow More , bring in more personal money, or cut corners according to their buying criteria (smaller surface area, less space, location, etc.). Only the current home prices still maintain some stability or a reasonable increase.

Read also: Mortgage credit: review of the method of calculating the rate of erosion, an emergency?

Fewer and fewer mortgages for small budgets

According to Michel Mollart, an economist at the Crédit Logement CSA observatory, “low-contribution households no longer have space in the market.” To come to this conclusion, this expert relies on the level of contribution currently required to obtain the loan. Compared to the end of 2019, it is now necessary to use more money from personal savings: + 28.8% in less than 3 years. Thus, the profile of new borrowers is shifting towards more affluent families, who already have significant savings at their disposal and can purchase more expensive real estate.

Overall, “double the number of loans granted since the beginning of the year” according to the CSA Credit Housing Monitor for the second quarter of 2022, with a -12.5% ​​decline in the level of quarterly production eventually halting. from June. But above all, it is the most humble families who suffer from this situation. Then they sometimes find themselves completely excluded from getting credit. Either due to an excessively high debt ratio, supported by increased interest rates over all periods. Either because the loan does not respect the rate of erosion, i.e. the maximum rate at which the financing can be granted, due to the difference between the increase in interest rates and the rate of erosion.

In order to be able to keep borrowing, more and more of these families are taking out mortgage loans over a longer period. Thus, 65% of the loans were obtained over a period of 20-25 years, which is a record figure, as it has not been reached before. At the same time, mortgages with shorter terms, less than 15 years, are becoming increasingly rare, with only 13.6% of new financing granted during these periods, which is again a historic figure.

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