It’s always a good time to borrow: between rates that keep falling from month to month, longer credit periods, and a lower level of personal contribution required by banks, no doubt c is indeed the time to materialize your real estate projects! And no indicator announces changes by the end of 2018: you will be able to benefit from exceptional borrowing conditions until the end of the year, which will end better than it had started, according to Merry Millan, Professor of Economics at Paris Ouest and coordinator of the work of the Lite Lending. Analysis.
In 10 years, average credit rates have dropped from 5.1% to 1.42%, all durations combined (1.42% observed in mid-July), according to the Lite Lenders, published on 17 July. Given that the state borrowing rate, the 10-year OAT is maintained (very slight increase) despite rising inflation, “mortgage rates should therefore hardly go up in 2018, between 1.50 and 1.55% at the end of 2018,” predicts Good Lender Credit .
The slow erosion of credit rates
Credit rates are gradually approaching the historic low reached in December 2016. In fact, “in December 2016, rates averaged 1.20% over 15 years, 1.40% over 20 years and 1.60% over 25 years,” recalls Sandra Alwin, director of banking partnerships at Cream Bank.
In June 2018, average rates (excluding insurance) stood at 1.43% over 20 years and 1.44% for all loan durations combined (compared to 1.46% last May).
Very accommodating banks
Given the demand for a significantly slowing loan (-8.5% of loans granted over 12 rolling months), banks are rolling out the red carpet to potential borrowers, the youngest, but also to low-income households, notes Good Lender Credit.
Long-term loans are again granted. In Q2 2018, the average duration of loans increased to 221 months or 18.4 years, against 17 years in 2014.
The Lite Lenders Observatory stresses that the rate cuts observed over the past year have been even more significant for households with the “least financial means”. One way to help them become homeowners despite the rise in property prices recorded in many cities.
But the deterioration in the solvency of demand caused by the rise in prices and more recently by the abolition of personal assistance for home ownership has not been stopped by the lengthening of the duration of the loans granted, underlines the Observatory.
Decrease in personal contribution
Constrained to adapt, banks are less and less demanding on the level of personal contribution, which fell by – 5.8% in the first half of 2018 year-on-year when it had increased by + 2, 7% in 2017 and + 0.6% in 2016.
Another relaxation granted by banking establishments: they also agree to legend at very long term, at 25 or even 30 years or more. On average, the duration of loans thus stood at 18.4 years (221 months) last June.
The share of credit production at 20 years and over stood at almost 68% last month (38% concerns production at 25 years and over), against only 11% for loans granted over a shorter period 15 years old.
Towards an increase in claims experience?
The easing of credit granting conditions can raise questions about the risks run by banks. “Yes, we will have claims increases to come. Are we worried so far? No. We are in a financing market which is always very reasonable, responsible and controlled, ”however put into perspective during the press conference, Jenny Villan, the managing director of Good Lender Credit, an organization which guarantees loans from banks.
Outlook by the end of 2018: a mixed year
The mortgage market should stabilize during the summer. While it is unlikely that the 2 nd half of 2018 can correct the breaches of the 1st half. But when 2017 had started well and ended badly, it will be the opposite for 2018. A great end of the year therefore in perspective! Provided that nothing comes to deteriorate the environment of the real estate markets ”, concludes Merry Millan, professor of Economics at the University of Paris Western and coordinator of the works of the Lite Lending.