Real estate loan: the first buyers in trouble

Real estate loan: the first buyers in trouble

They’re still low … but rising. Mortgage interest rates have been rising since the beginning of the year. While in April 2021 we borrowed an average of 1.07% (excluding insurance) for all durations together, a year later the average rate according to the CSA Housing Credit Observatory reached 1.27%. With increases in benchmarks that vary by bank.

“Since January 2022, banking institutions have raised their tariffs between 0.20 and 0.75 points, depending on their production targets.”emphasizes Sandrine Allonier, spokesman for broker VousFinancer. “For a few first-time buyers, with a total income of € 3,500 and a 10% contribution, the rate can now rise from 1.42% to 2.05% in 20 years.”she says.

Also read: Article reserved for our subscribers Real estate loan: how to get a loan in the short term

The first victims of these rate shocks: first-time buyers and low-income households. “Since the beginning of the year, we have seen a decline of 5% to 7% for buyers under 35 and employees and workers.”regrets Yanna Jéhanna, president of the Laforêt network of real estate agencies.

“Their debt ratio exceeds the ceiling of 35%, trying to build a contribution and monitor the growth of rates.”, he notes. From 1ehm January 2022, the High Financial Stability Board (HCSF) requires banks not to lend to households for more than 25 years in general and to ensure that the debtor ‘s debt ratio does not exceed 35% of his income.

Wear rate exceeded

In addition to rising interest rates, tightening credit conditions and, above all, high real estate prices, there is also a low level of usury for these borrowers, ie the maximum rate at which banks can lend. For loans of 20 years or more, the wear rate has been only 2.40% since the beginning of April.

“With rising rates, a lot.” projects from first-time and low-income households exceeds the rate of wear and tear at the time of the calculations “notes Olivier Lendrevie, President of Cafpi Broker, stating that in his network in May, “The order of magnitude of files rejected due to wear and tear is one in four, but it is difficult to specify because sometimes we do not submit files to the bank as we know they will be rejected because of this.

Read also Article reserved for our subscribers Real estate loan: what to do if your file is rejected?

To understand this, you should be aware that these wear rates are calculated each quarter by the Banque de France for the different loan categories on the basis of the average rates charged by creditors in the previous quarter increased by a third. (The annual percentage rate of charge – APR – is calculated, which includes all costs associated with the loan). So they are always a quarter behind the applied rates, which can be worrying in a period of rising rates.

You have 48.97% of this article to read. The following is for subscribers only.

Source link

Leave a Comment

Your email address will not be published.