Real estate: interest rates low in June

If you want to invest in stone, it's more than ever the moment! Mortgage rates for individuals fell to 1.25% in June (excluding insurance), according to the CSA Housing Credit Observatory. A record low after the previous record of May at 1.29%. And this spiral is not over. In July, rates could approach the symbolic threshold of 1.20%.

In fact, these rates are "four times lower than in the early 2000s and almost 10 times lower than in the early 1990s." And as the planets are well aligned, with inflation remaining low (1.2 % in June), this means that the actual costs of borrowing are particularly low.

Only downside, banks and insurance companies keep their hands on the borrower insurance. Even if it is not mandatory but often requested by financial institutions, this insurance tailored to the profile of the borrower can be found at a level above the cost of credit ... Individuals to play to lower it.

"Mortgage loan rates are still falling and they have fallen to the lowest level found until then, below their floor of autumn 2016," says the monthly observatory credit Housing / CSA in a statement.

Households ready to borrow over time
Given this situation, the duration of loans tends to grow, with an average of 231 months (19 years and three months) in June 2019, 30 months more than in early 2014.

Individuals do not hesitate to go into debt over time. The share of loans under 15 is now only 8.5%. More than half of all households under 35 years old are now borrowing 25 years or more, compared to just 20.4% in 2014.

Another development is that banks are better prepared to lend to a younger and more modest clientele. According to the Observatory, the personal contribution requested fell by 8% in the first half of 2019 compared to the previous period.

According to the Banque de France, "the criteria for granting mortgage loans have returned to their 2007-2008 levels". Outstanding home loans exceeded the 1 billion mark at the end of the year at the end of 2018.

If some economists sound the alarm on the debt ratio of households, one element can reassure: the housing loans granted by French banks are almost exclusively fixed rate, which can be a protection in the event of a rise in rates in the future. An accommodative monetary policy To explain these low rates, several reasons are put forward. To support economic activity, the European Central Bank has for several years relied on accommodative monetary policy. In principle, it has not planned to raise base rates before the summer of 2020. At the same time, banking institutions whose business, so to speak, relies on loans are engaged in competitive battle to attract borrowers. This easy access to credit would be a very good thing if real estate prices did not upset the situation. According to the website Le-Partners.fr, the average rise in property prices reached 8.6% in the top ten cities of France since early 2019. As a result, the real estate purchasing power of the French (ie the number of m2 that one can buy) residing in these agglomerations fell by 4.2 m² between June 2018 and June 2019.

Updated date : 04/12/24
Creation date : 18/07/19

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