Mortgage Credit: Punishing Low Income Families - Meilleurtaux.com

Some banks have stopped distributing mortgages – Meilleurtaux.com

In the realm of mortgage loans, banks are forced to take a break. In question, the low wear rates and staff shortages that characterize the summer season. Therefore, brokerage firms regret the freeze in loan production this month. Interest rates are likely to face the same fate.

Banks are becoming more and more demanding in terms of housing loans. They are unable to increase the profitability of their loans. Thus, families wishing to borrow soon are obliged to bear the consequences of this action. The broker warns that the market is going through a critical situation. He revealed that the lending institutions are suspending their activities and asking them to return next month. Many have already partially stopped producing their loans either with intermediaries or directly at their branches. Among them, for example, BNP Paribas, Crédit du Nord and Société Générale.

What is the rate for your project?

The wear rate is still very low

Because of this tightening of banking conditions, the number of mortgages issued fell in the second quarter of 2022. The Credit Scoring Monitor details that it shrank 9% compared to April and June 2021.

However, positive things have been noted in this sector. The Banque de France estimated housing loans maturing at 6.8% in March 2022. Borrowers are shrinking. On the other hand, loan amounts are increasing in response to rising housing prices.

The fundamental problem for banks, as well as for borrowers, is structural It is related to the rate of wear. The maximum limit on lending when exceeded is still very low. This makes facility margins below zero. The cap rate is currently 2.57% for loans of at least 20 years. Our spokesperson, Mile Bernier, warns that when credit is granted at a 2% interest rate:

[…] Expenses of files and warranties quickly make out of wear and tear.

Mile Bernier

Another expert argues that It becomes very difficult to stay under the wear rate when it exceeds 1.8%.

What is the rate for your project?

High interest rate may affect the ability to finance files

Another specialist explains that the refinancing of banking institutions is now accompanied by a much higher cost. She explains that due to wear and tear, this additional cost cannot be incorporated into her price. In fact, banks will only cause the opposite effect of what they are looking for by tightening interest on loans. Since January 2022, institutions have already increased their rates significantly. All real estate projects will become unfinanced if recovery continues to be determined.

opposite, Banks are reluctant to grant interest rate cuts because they have not been able to properly improve their margins. This is the case during a period of high interest on public debt in France. Lending intermediaries reveal that this situation obliges them to implement relaxation.

The Bank of France in principle allows banks to lend at a higher interest rate. This would enable them to strengthen their fringe a bit. However, these institutions will not take advantage of it to increase housing loan rates. For 20-year loans, it ranged between 1.8% and 2.2% last month. In this month of August, this range should be maintained.

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