Real estate loan: borrowing conditions still favorable over the last months of the year.
Appreciable interest rates for the best profiles
The real estate market is currently in a relatively gloomy phase. While activity started to boil at the start of the year, the last quarter saw weaker transactions. Faced with this drastic drop in the demand for credit, banking establishments choose to relax their conditions for granting credit to access home ownership. The purpose of this measure is obviously to encourage households to embark on an acquisition project.
As a result, it is still possible to borrow with competitive interest, even if a rise in rates has started in recent weeks. However, it remains relatively minimal and particularly targets subprime borrowers. Those with an advantageous profile can still successfully negotiate a competitive rate.
In fact, according to the Housing Credit Observatory / CSA, the average borrowing rate in November stood at 1.44%. But by obtaining a loan repaid over 15 years, it is possible to obtain an average rate of 1.22%. The same is true for a 20-year loan where the average rate is around 1.4%. And seniors are particularly concerned by shorter depreciation periods, due to their older age and their sometimes higher financial capacity (financial and real estate). Those with an attractive profile for banks are therefore able to negotiate a rate of this ilk.
The average duration of mortgage loans has never been higher
Finally, the Observatory also notes that the average duration of loans continues to increase over the months. A record was even recorded in November with an average duration of 227 months. Since the start of 2018, the progression has even been an additional 8 months. Compared to the first half of 2014, this is practically an increase of 24 months.
But how to explain this increase in household debts? Already thanks to the phase of relaxation of the conditions for granting loans to maintain activity. Banking professionals take the risk of lending over longer periods. But also because the real estate market is experiencing a price appreciation in certain areas. Especially in major cities. Households therefore have no choice but to finance themselves over a longer period to become owners.