ECB Raises Key Rates for 10th Consecutive Time as Buyers Benefit from Falling Prices

In order to limit inflation, the European Central Bank (ECB) has once again raised its key rates. But with the monthly updating of usury rates, month after month, the banks were able to replenish the margins they had lost on new real estate loans.

The situation could improve for buyers, combined with the drop in prices which is taking place in France.

A 10^e consecutive increase

As anticipated by the financial markets, the ECB has just announced a further increase of 0.25% in its key rates, notably bringing its refinancing rate to 4.50%, i.e. the 10^e consecutive increase. This has the effect, or has had the effect since 2022, of increasing the cost at which banks buy the money they lend. Cost that they passed on to their credit rates by increasing them.

According to the newspaper Les Échos, the ECB indicated that “the current level of rates is sufficiently restrictive to bring inflation back towards the target objective (2%) over time. » Even if it still stands at 4.9% in August over one year, according to INSEE.

For Caroline Arnould, general manager of the real estate loan broker Cafpi, this new tightening could indeed be “the last or, at the very least, that we are approaching the end of the phase of rising credit rates”.

“Towards a normalization of the credit supply”

Since the start of the year, successive monthly adjustments of usury rates have allowed banks to gradually rebuild the margins they had lost on new loans.

This allows the Cafpi broker to envisage, in the coming weeks, “a normalization of the credit offer with the gradual return of banking networks which had placed themselves on the fringes of the market from June 2022, and the slowdown the rise in credit rates which could stabilize at a plateau of between 4.50% and 5%. »

Good news for buyers, prices are falling

Other good news for buyers: the downward movement in prices is sensitive to the 2^e quarter 2023 in cities like Strasbourg (- 4.4%), Tours (- 3.9%) or Caen (- 3.9%), according to the National Real Estate Federation (FNAIM).

And very significant discounts are made on properties of lower energy quality with – 13.7% on an equal basis for properties rated G or F under the energy performance diagnosis (DPE) compared to those of better quality, after the observatory of the Guy Hoquet real estate agency network.

“This price correction is particularly welcome for first-time buyers and, combined with the rapid increase in salaries (+ 4.7% in the private sector over 12 months according to the Ministry of Labor), could, if it continues , quickly offset the effect of the rise in rates,” remarks Caroline Arnould.