Mortgage Rates on the Rise: Challenges and Opportunities for Borrowers

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Published on
Saturday, May 6, 2023 9:30 a.m.
by the Meilleurtaux editorial team

Mortgage rates continue to climb, to exceed the 3.60% mark over 20 years with some brokers. In fact, the difficulties of taking out credit are increasing for many borrowers. Decryption.

The average mortgage rate in banks at the beginning of May was 3.30% over 20 years according to the monthly statement from Meilleurtaux. For comparison, “the average rate over 20 years was 3.20% in early April,” recalls the MoneyVox news site. Either the average rate for a loan over 15 years goes to 3.20% and, over 25 years, it amounts to 3.45% according to Meilleurtaux.

What rate for your project?

An increase in rates linked to the increase in usury

This rate hike is not a surprise. Because since May 1, the usury rate, this ceiling rate beyond which banks are not allowed to lend, has risen to 4.52% for a mortgage over twenty years and more, against 4, 24% in April. This is its largest increase since the beginning of the year, and it has a direct impact on the rise in credit rates.

Asked by Les Echos about the increase in wear and tear, our communications director, Maël Bernier, considers this to be “good news”. According to her, “this gives the banks some breathing room to lend at the right price given the rates at which they borrow”. Indeed, today, many of them consider that “the cost of the resource is too high”, explains our spokesperson to MoneyVox. Clearly, lending is too expensive for the banks, and this increase in the usury rate makes it possible to follow these developments without further blocking for borrowers.

Dwindling access to credit for some borrowers

In a context where “banks no longer earn money on mortgages”, in the words of Maël Bernier, they no longer have any interest in lending money. Or at least they will, but sparingly, studying borrower profiles even more closely.

Under these conditions, taking out a mortgage only seems accessible to a minority of borrowers. “Those who are more easily eligible are second-time buyers who have a property to sell and who, thanks to the capital gain made, arrive with the contribution and therefore have a smaller loan to make”, judges Maël Bernard.

What rate for your project?

The floodgates of real estate credit soon to be reopened

While the noose is tightening month by month for borrowers, as credit rates increase, the CSA Credit Housing Observatory notes that the number of loans granted by credit institutions is down by 40, 6% over one year. And when the French manage to borrow money, it is generally to buy less. Indeed, the Observatory notes that over the past year, the purchasable area has declined in all major cities, in response to the rise in interest rates and housing prices.

However, Meilleurtaux’ communications director is optimistic. She assures MoneyVox that “the banks will reopen the mortgage tap” under short deadlines: “this summer, and even more surely in September”, she specifies. Provided, however, that the 10-year OAT rate (the rate on government bonds), which was 2.89% on April 28 according to the Banque de France, stabilizes.