Even the health crisis will have had almost no effect on mortgage rates. Barely a slight tremor during the first half of 2020, the average rate of loans granted falling from 1.12% in January to 1.27% in June, excluding insurance and all loan periods combined, according to the Housing Credit Observatory / THAT’S IT. This small increase is due to the recommendations of the High Council for Financial Stability (HCSF) enacted in December 2019. Faced with a record amount of 258 billion euros in loans granted that year, the HCSF asked banks to be more selective: no more than 33% debt, loans with a term of less than 25 years and the end of financing at 110%, that is to say costs included. The banks complied by demanding, according to the brokers, more personal contribution. For the months of April and May 2021, the average interest rate stabilized at a historically low level, at 1.07%. “If loans over 25 years only represent 0.2% of production in May, the portion of terms over 20 years further strengthens its weight to 56.5% of the production of home loans “, specifies the Observatory.
Lesson 1> Compensation
The continuous rise in real estate prices, which have almost doubled in less than 10 years,
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forced homeowners to extend the term of their mortgage to be able to borrow a larger amount. The average interest rate over this period will vary between 6% and 3.5%. It first showed a decline between 2001 and 2006, before rising to 5.5%, when the financial crisis broke out. subprime, while the level of personal contribution required remains relatively stable.
Lesson 2> Reduction
Despite the financial crisis of 2011 and the occasional drop in property prices that followed, the period 2009-2017 was marked by the sharp fall in interest rates, which accelerated from 2016 when the average interest rate , excluding insurance and all loan durations combined, fell below the 2% mark in order to offset the resumption of the overall rise in prices. Banks are in fierce competition for new customers and the level of personal input required is halved.
Lesson 3> Restriction
Tackled by the High Council for Financial Stability and worried about the potential repercussions of the health crisis linked to the Covid-19 epidemic, the banks have tightened the conditions for granting real estate loans. The 10-year OAT, which allows banks to finance themselves, has entered (and remained) in negative territory since 2019, which allows them to maintain attractive interest rates. But to reduce their risk, they require a personal contribution of at least 10% in order to pay the costs related to the purchase (mainly transfer taxes, real estate agency fees, etc.), which should be confirmed. in 2021.
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