After complicated borrowing conditions in 2022 where many loan files were rejected due to extremely high credit rates and very low abrasion rates, what are the prospects for mortgages in the beginning of 2023?
applicable wear rates for 1Verse The quarter of 2023, it was just increased by half a point, but this is still not enough to unlock the market, because banks have already raised their credit rates …
Unprecedented levels of credit rates since 2015
All bank balances received by broker Vousfinancer show record price increases in January, by 0.30 pips averaged over one month and up to 0.50 pips per bank.
This brings credit rates to “levels not seen since the end of 2015, between 2.50% and 3% over 20 years and between 3 and 3.5% over 25 years,” according to Vousfinancer. In January 2023, compared to January 2022, published rates more than doubled, with increases of 1.30% averaged over 12 months.
For the Empruntis median, the metrics received at the beginning of January also indicate increases of between 0.10 and 0.50 points. The average rate is 2.65% over 20 years and 2.75% over 25 years.
For the Brito broker, credit rates averaged 2.70% over the 20-year period in January, up between 0.40% and 0.45%. “An expected situation, according to him, regarding the increase, on December 15, of the European Central Bank (ECB) of its main rates by 0.5 points, which makes the refinancing rate in particular 2.50%.”
The ECB’s master key rate determines the cost of funds for banks within the eurozone.
Good news: Wear rates, the sticking point in the market, are on the rise
Interest rates are the thresholds set by the Bank of France beyond which a banking institution is prohibited from lending money. The aim is to protect borrowers by prohibiting the granting of loans at excessively high rates.
Since April 2022, their calculation method, which takes into account bank-charged rates (APR) in the previous quarter, has been a step too far. Indeed, according to Empruntis, the rapid rise in credit rates, due to the increase in the cost of funds for banks, makes usury rates obsolete in the months following their entry into force.
Banks are then forced to practice credit rates that are too low to apply the real cost of money to them. If they are forced to sell at a loss, the broker explains, they would prefer to distribute lower balances.
Hence, the number of borrowers who were refused financing for their real estate project has been increasing since last summer.
Good news: New wear rates announced at the end of December 2022 for 1Verse Quarter 2023, it increased from 3.03% to 3.53% (+0.50 points) for mortgages of 10 years and less than 20 years and from 3.05% to 3.57% (+0, 52 points) for loans of 20 years or older.
It is then assumed that more loan files will be released. “But this fresh air given to the market will unfortunately be very short-lived,” says Brito.
The shooting window is a few weeks for borrowers
So the banks expected interest rates to rise by increasing their loan rates this month – nearly 3% over 20 years – by the same proportions as interest rates. Credit rates were previously not applicable, due to the level of erosion rates, but can now be offered.
“Even if discounts are still possible for the best files, it is certainly true that with these levels of credit rates, and the gap so low with erosion rates, the withholding situation we’ve known since the end of summer is likely to continue and become very troubling for first-time buyers,” notes Julie. Pachet, CEO of Vousfinancer.
A window of opportunity looms for a few weeks for borrowers before credit rates rise further (they could reach more than 3.5% in 20 years by summer).
Cecile Roquelor, Director of Studies at Empruntis reassured, “Not all banks have the same strategy. Those who have already raised their credit rates sharply have lost less money, and they don’t need to increase their credit rates, and vice versa. The mortgage market is no longer homogeneous.” »
New call to air in the second half of 2023
Since the level of profitability of banks remains low, their credit production targets will be lower in 2023 than in 2022, down about 10%, according to Sandrine Allonier, spokeswoman for the broker Vousfinancer.
“Some banks are considering setting their targets for the second half of the year instead. In the first half of 2023, they may not be able to lend at rates high enough for them, due to market conditions. The second half should be more favorable,” she emphasizes.
and new wear rates to be announced on 1Verse April for 2H The 2023 quarter should be more resilient (more than 4% for 20-year loans, Vousfinancer estimates), because credit rates should continue to rise in the coming months, possibly reaching 4% over 20 years at the end of the year.
A level not seen since 2012, but which should make it possible to restart the credit machine in the second half of 2023.