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Home Loan: What are the expected credit rates with wear rate repair?

The maximum rate above which the bank cannot lend will be recalculated monthly instead of once every three months, temporarily. If this is going to allow many buyers to get financing, the risk is that prices also increase more quickly.

This is expected news from credit professionals: The erosion rate, the maximum above which a bank cannot grant a loan, will be reviewed each month. This change in the method of calculation was determined after several discussions on the subject between the Banque de France, the Ministry of Economy and various actors in the sector. it will be Submitted from February 1, 2023 through July 1, 2023.

In normal times, this is the rate, and its purpose is protect loan applicants from potential abuses by banks, It is only reviewed once every three months. However, with the rapid increase in interest rates and untracked usury thresholds, many prospective buyers found themselves locked out. By recalculating this ceiling once a month, the aim is to “maintain the goal of protecting borrowers from the rate of wear and tear, while avoiding a situation where it might become a factor for rationing credit supply,” explains the Ministry of Economy.

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‘The biggest hikes are behind us’

And for good reason, borrowers aren’t the only ones up against the wall. Banks also find themselves in a complicated position, as they cannot raise their rates enough to handle the increase in the 10-year OAT, an indicator of the French government’s borrowing rates, which serves as a benchmark for banks to set their lending rates).

The result: Loan production slowed in the last quarter of 2022. In this context, what effect will the technical adjustment to the method for calculating the abrasion rate have on real estate rates?

It is a fact that the average loan rate over 20 years has gone from 1% in February 2022 to 2.63% in January 2023. If it doubles in one year, “the larger increases are behind us,” believes Maël Bernier, a spokesman for the Meilleurtaux group, contacted Its MoneyVox The 10 year OAT rate has fallen permanently below 3% (2.48% on Jan 18th Ed) so credit rates at 4% look like a lot to me I think the peak will be around 3.5% in June. Banks will prefer not to increase more than reason To make credit mortgage a loss-making leader again.”

Moreover, although there is no doubt that prices will continue to rise for several more weeks, borrowers can count on the possibility of lower real estate prices. According to a study by Credit Agricole on mortgages, the prices of old properties could fall at the same time by an average of 4.8% in 2022 and 2% in 2023. This should reduce the rise in the cost of credit and allow not to reduce too much. On the desired property area.

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