If rates do not go down and have even started to rebound this summer, that’s good news too. At least from a macroeconomic point of view. Indeed, the end of the fall in rates marks the return of growth and economic recovery. Even if the latter is still not very noticeable in France. The second upward factor is more seasonal.
Why are rates no longer falling?
Many transactions are carried out during the summer holidays, for reasons of organization with schools. Which pushed up the tariffs upwards. Another explanation is that ten-year Treasury bond yields, which partly affect the level of mortgage interest rates, have begun to rise for several months. After a long slide, they started climbing from April.
“While the 10-year OAT rate has risen by more than 85 basis points between mid-April and mid-July, real estate mortgage rates have only increased by 16 points since June,” said Credit. Housing. The OAT is today at 0.95% while it was at 1.05% at the end of July. Finally, as rightly pointed out ES Microcredit, “the banks are crumbling under the demands of renegotiations of loans and to slow down this important flow some have been tempted to increase their rates”.
It’s still time to buy
If you have an acquisition project, we must not lose sight of the fact that the rates charged at the end of the year, despite the small increases that occurred this summer, are still very interesting. As ES Microcredit, Communication Manager at EEI Credit points out, “last March we proposed a fixed rate of 2% over 20 years. In April it rose to 1.80% over 20 years, in May to 1.74%. From June rates have risen to 1.80% in June and 2.15% in July.
As a reminder, in September 2014, average rates were higher: 2.85% over 20 years. But according to ES Microcredit they should remain attractive for a few months: “everything suggests that we are moving from now to a rate stability until the end of the year, except exceptional event. And given the accommodative policy currently being pursued by the ECB, which has kept its key rate at 0.05%, we are not planning a significant increase. “
Make yourself less expensive. Still, if the rates increase a little, the borrower has some assets in his game to assert when taking out his loan. First of all, we should not focus on the gross rate, but rather on the overall effective rate that includes all fees (administrative fees, interest rates and death and disability insurance). If you are young and in good health do not hesitate to do what is called a delegation of insurance. You will then leave the group contract of the lending bank which is very general and you will take out a contract cheaper. This insurance delegation will very largely offset the increases recorded since the cost of insurance is halved on average. It is only necessary that the coverage of the contract is at least equivalent to the group contract of the bank.
If you are a first-time buyer, know that you will average your first acquisition seven years. You will then come back for bigger. Since borrowing conditions are still particularly attractive, it would be a shame to lose them in a few years. You can keep them by making a loan transfer. This modality must be specified from the start. “A large majority of banks now offer this opportunity,” said ES Microcredit. And to add: “mixed credits at fixed and revisable rates have reappeared”. Another possibility to compensate for the rise in rates is the extension of the repayment period.
It will dampen the rate increase. According to CL Bank, in August the loan term was 243 months for the accession to the new. “In a growing market, the lengthening of the durations observed in August largely offsets the increase in credit rates observed since last June,” notes CL Bank. The share of loans over 25 was 18% in the first quarter of the year. It is now close to 21%. “The current levels of credit conditions allow many households to enter the market for accession, for long periods, without this penalizes”, according to CL Bank.