Mortgage Credit: Is Returning Variable Rates Good or Bad News?

Mortgage Credit: Is Returning Variable Rates Good or Bad News?

Responsible for the onset of the 2008 financial crisis, variable rate mortgages still smelled of sulfur, particularly in France, where they had never been so successful. The principle of these loans can actually intimidate those seeking to borrow money: the loan rate is generally lower than the average fixed rate loan in the first year, but changes according to the level of money rent thereafter. .

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An interesting possibility when one would expect a drop in interest rates, this was also the case in the early 2000s, when these floating rate loans attracted a certain number of French borrowers. On the other hand, these credits do not have much advantage when rates are low, as in recent years.

Variable rate mortgages, which have disappeared from the shelves of bankers, are making a comeback. This phenomenon is quite surprising considering that rates have risen sharply in recent months.

Thus, in July, at broker Cafpi, clients were able to borrow at an average flat rate of 1.48% over fifteen years compared to 1.29% in June; 1.58% over twenty years versus 1.42% and 1.75% over twenty-five years versus 1.57%. While the 10-year Treasury (OAT) rate, which reached 2.39% at the beginning of June, has fallen back below 1.7% (its level in May), the recent increase in the ECB’s key interest rates ) does not bode well for the future.

Counter proposals at variable prices

However, some institutions offer mortgages at variable rates. The movement is far from generalizing, it is about a few common banks [Crédit agricole, Crédit mutuel, Caisse d’épargne, Banques populaires…]but it can beJudge Mael Banier is a spokesperson for broker Meilleurstaux.

A regional bank has put it back in scope, but wants to use it only for specific needs such as a staging loan. Another regional bank asked us to restart one in September.” Cecile Rockellor, director of studies at Empruntis, notes. We see that some banks have started to offer counter-proposals at variable rates. Others assured us that they are strongly considering promoting these credits to their trading network and the brokers they work with.” We say in Brito. For its part, the broker Cafpi has started offering this type of loan to some of these clients.

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