2023-10-29 11:00:00
The cost of real estate credit continues its crazy rise. The average borrowing rate over twenty years reached 4.04% in September, according to the Crédit Logement CSA Observatory, and even 4.20% in recent weeks according to brokers. A figure at the highest in ten years. This movement is probably not over, even if the pace is slowing because the increase in key rates initiated by the European Central Bank (ECB) to fight inflation is, a priori, coming to an end. However, “the surge in oil and gas prices could restart inflation, which would encourage the ECB to continue its monetary tightening policy for longer than expected”, notes Cécile Roquelaure, director of studies at Empruntis.
To set their scales, banks also pay attention to the level of the 10-year OAT, the benchmark government bond on the French market. “On average, there needs to be a gap of 100 to 150 basis points between the 10-year OAT and the rate of a loan for the latter to be profitable for banks,” indicates Cécile Roquelaure. However, long-term rates are close to 3.50%, pleading for a continued surge in property loan rates. According to Empruntis, these could rise up to 5% at the start of 2024.
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An intake of 20% is strongly recommended
The borrowing capacity of buyers will therefore continue to be reduced, while stone prices are just beginning to decline. “A single person with 4,000 euros of income could borrow 251,000 euros a year ago at 2.50%, and only 215,000 euros today at 4.30%,” underlines Maël Bernier, spokesperson for Meilleurtaux. Many buyers find themselves forced to revise their project downwards if they cannot compensate for the increase in the cost of credit with a larger contribution. Especially since banks are today very attentive to risk: the presence of a contribution of around 20% of the amount of the operation and the borrower’s ability to subscribe to other bank products – investments, insurance, etc. – are all elements that can reassure them, and therefore help them decide to grant credit. “Some regional banks continue to lend to young people without down payment when they are at the start of a promising career,” nuance Sandrine Allonier, spokesperson for Vousfinancer.
There is, however, a glimmer of hope. “Certain banks, reluctant to lend a few months ago, are returning to the market,” notes Sandrine Allonier. “They are accepting more files than before, and are opening up to different profiles.” A good point for investors.
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