Mortgage Credit: Punishing Low Income Families - Meilleurtaux.com

French mortgage rates could continue to rise – Meilleurtaux.com

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The conditions under which loans are made prove unfavorable to the French who want to finance their real estate project by borrowing. On the other hand, interest rates continue to strengthen. On the other hand, the rate of usury prevents many families from obtaining loans. This issue mainly concerns those wishing to obtain primary housing and those between the ages of 30 and 55.

The prevailing context in the French mortgage market is currently playing against buyers. This is the remark made by the president of the French Association of Bank Guarantee Brokers (AFIB), Jerome Coussano. Hence, he is calling on the French to grant a property to postpone their project for the time being. The manager states that interest rates are around 2%. Significantly higher number compared to the beneficiary period from 2017 to 2021.

Jerome Cusano believes that borrowing rates may continue to rise. He said it is a tool of the European Central Bank to contain the current economic crisis and inflation.

What is the rate for your project?

The wear rate complicates the French’s access to credit

In France, families are more and more struggling to get a loan to buy a house. Almost 50% of loan files are now rejected. A survey conducted by the Opinion System for Afib shows that 45% of requests receive a negative response. Jerome Cusano comments that this percentage is worrying.

For the association, the problem of obtaining housing loans appeared at the beginning of January 2022 due to wear rate. To solve it, Afib thus proposes to reform the method for determining this percentage. This threshold is obtained using the mean home loan rate Labor force for the past three months, increased by a third.

Jerome Kusano points out that They suggest increasing it by two-thirds to ensure better access to loans. He points out that the French central bank governor has the authority to adopt an exceptional clause. This is by raising the rate of wear for a month.

The AFIP chief states that the erosion rate represents the ratio set by the French central bank every three months. Above this limit, banks are not entitled to grant a loan.

What is the rate for your project?

The rate of change in the wear rate is insufficient

Jerome Cusano argues that this mechanism protects borrowers:

[…] Banks that may try to finance the consumer are faced with very high rates compared to the market average, which is a very good thing, but the problem is that this rate is not rising fast enough compared to the high rates.

Jerome Cusano

Real estate professionals fear that this difficulty in obtaining housing loans will affect the entire sector. Jerome Cusano reveals that sales of new and old properties are already suffering, as well as construction :

[…] This also risks affecting the construction industry, France’s largest employer, but also notaries and remittances of taxes that fall into state coffers.

Jerome Cusano

For loans of at least 20 years, AFIP details, The attrition rate was 2.57% at the beginning of July 2022. 71% of the rejected files observed in Nizam’s survey relate to major housing acquisition projects. The study also notes that 51% of rejected applications are for people between the ages of 30 and 55.

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