Real estate credit: fall in purchasing power in 2023
This is confirmed by the Banque de France: households’ real estate purchasing power is collapsing at the start of 2023 against a backdrop of constantly rising interest rates. Bad times for the French who wish to finance a real estate project on credit. A savings solution to obtain your loan: delegate borrower insurance, a recommendation that has never been more relevant than in this period of soaring rates. Mortgage rates at more than 3% in March 2023 In its latest report published on March 6, 2023, the Banque de France once again attests to the increase in mortgage rates. Last January, the average effective rate in the narrow sense, excluding mortgage loan insurance and other costs, stood at 2.20% (renegotiations included), compared to 2.05% in December 2022 and 1.12% in January 2022. According to the advanced estimate, the average rate for February should stand at 2.33% on new housing loans. The average rate has grown by 52 basis points since September 2022 and by 108 points in one year. The jump is spectacular and rapid, and illustrates the deterioration of monetary conditions in the euro zone (inflation, rise in the cost of refinancing retail banks). Figures once again out of step with those of the Observatory Credit Housing / CSA. Question of different methodology, the data overlapping with a quarter of difference. According to the Observatory, the average rate for all durations combined reached 2.82% in February 2023, compared to 2.61% in January (excluding mortgage credit insurance and cost of security). In detail, the average rates granted by the banks in February were as follows: 2.62% over 15 years 2.83% over 20 years 2.96% over 25 years. The acceleration in the rise in interest rates is due to the significant revaluation of usury rates in January and February 2023. With a usury rate at 4% over 20 years and more in March 2023, March values should demonstrate continued rate increases. Most borrowers are paying rates above 3% in March 2023, even over the classic 20-year term. The phenomenon is not about to stop before June, if however the refinancing conditions of commercial banks stabilize. Brokers anticipate gross rates at 3.50% by spring, or even 4% during the summer. Loss of 12 m2 of real estate purchasing power Rates that are rising sharply lead to an increase in the cost of real estate loans. A loan of €200,000 over 20 years cost €21,392 in interest in February 2022 (nominal rate at 1.03%), compared to €66,207 currently (average rate at 3%). Even if wages have increased by an average of 5% in 2022 (Banque de France data) in direct connection with inflation and increases in the Smic, households are suffering from the drastic increase in borrowing rates and see their purchasing power real estate decrease. For an identical budget, they must borrow more, if their borrowing capacity is there, or reduce their purchase expectations and give up square meters. According to the Banque de France (BdF), a household with a median income could buy 80m2 in December 2021; interest rates were at the floor then. In January 2023, with the same income, he can only afford 68m2, a loss of 12m2 in one year. To compensate for the rise in interest rates, borrowers are going into debt for longer periods. Still according to the BdF, the average duration of loans granted in December 2022 for the acquisition of the main residence was 23 years and 1 month for all borrowers, and 23 years and 9 months for first-time buyers, these the latter representing 50.3% of the production of real estate loans intended for the financing of this type of property. Production of real estate loans in free fall The increase in rates has resulted in a drop in demand and a fall in the production of loans. In February 2023, the overall amount of loans granted fell by nearly 10% compared to January and the number of loans by 9.3%. The plunge is even more spectacular compared to the same period last year: -47.8% for production compared to February 2022 and -48.7% for the number of loans granted. Over one year, between March 2022 and February 2023, production contracted by 28.2% and the number of mortgages by 27.2%. The most modest profiles find themselves excluded from access to mortgages, those with insufficient personal contributions and precautionary savings. According to data from the BdF, the share of low-income households among first-time buyers of the main residence was 20.4% in December 2022, compared to 27% in January 2020. Controlling debt with the delegation of insurance We insist on the financial interest in taking out borrower insurance competing with that offered by the bank. Alternative offers are up to three times cheaper than banking group contracts. Claim your rights by delegating insurance to save and reduce the cost of your mortgage. This approach is one of the tips for staying under the wear rate in 2023 and getting your mortgage. Put the offers into competition thanks to a home loan insurance comparator and select, with the help of a specialized broker, the most competitive formula in compliance with the equivalence of guarantees required by the lender. For a loan of €200,000 over 20 years contracted by a borrower between 20 and 35 years old, with no health history, bank insurance will be offered at the average rate of 0.34%, compared to 0.10% for the best alternative offer . By subscribing to a delegated contract, our borrower reduces the cost of his loan by €9,600.
