Real estate credit: 4 clues proving that the holiday is not over for buyers

Rates that continue to decline, banks overflowing and insurance that sometimes costs more than the mortgage itself … For those who buy their home with credit all planets are aligned for awhile.

Since April, the plummeting mortgage rates have allowed an increasing number of households to make the transition from buying a first property or a larger home. An opening of the gates which is reflected in the figures: the bar of one million real estate transactions has already been crossed at the end of July 2019. At cruising speed, only 800,000 housing units a year change hands. Never seen !

Credit side "the exceptional of a few months ago has become the norm," says Maël Bernier, director of communication of Meilleurtaux. The broker finds in his 29^e Observatoire du Crédit immobilier a new situation. The average real estate rates recorded in the network, before bargaining and excluding insurance, are 1.45% over 25 years, 1.25% over 20 years and 1.10% over 15 years. Nearly 60% of banks fell below 1.50% over 20 years and nearly 40% below 1.10%.

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This situation should not change in the coming months thanks to the continuation of the very accommodating monetary policy of the European Central Bank. And which is already translated by signs that do not deceive.

1- The fall in the cost of credit continues

Who says lower interest rates says increase in
real estate purchasing power. In fact, for a loan of 200,000 euros, Meilleurtaux.com
has calculated that the decline in the cost of credit has reached 65% in 5 years! So,
to repay this amount over 20 years, 2800 euros / month of net income are
required, compared to 3200 euros / month in 2015 and 4000 euros / month in 2008.

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Becoming owner of your first home, a bigger property, a better location or no flaw can become a reality. Including tight budgets that are resolvabilized by low rates, provided they live in cities spared by soaring prices. As for young active people: under-35s represent 49% of the borrowers according to Meilleurtaux.com.

2- Some overflowing banks slow down the pace or even refuse files

With such favorable financing conditions,
records have flocked to the institutions. So much so that buyers have to
be very patient before their case is treated. In particular
in big cities where the real estate market is dynamic. And let's not talk about the renegotiations of
credit: "it takes more than 6 months for a renegotiation to succeed
since they pass after loan applications, "said Maël Barnier.

"The banks are overloaded and some do not hesitate
not to close the curtain, "says Hervé Hatt, president of
Meilleurtaux.com. Having achieved their 2019 targets, some establish
prioritize the processing of loan applications that pile up before granting
again. Left to propose dissuasive rates to refuse any new
folder. However, the situation should be resolved in mid-November, once
the pending pending files and the 2020 targets of the launched advisers. And
the revived war between the establishments.

3- Bankers prefer your savings to a personal contribution

With a borrowing capacity boosted by floor rates, it is not unusual for bankers to borrow 100% of the project amount, or even up to 110%, "now even for a loan over 25 years" , notes Hervé Hatt. This financing without contribution which covers not only the price of the good but also the expenses of the operation (of notary, agency, guarantee …) is in particular proposed to the households which can justify a pocket of savings. But also now young first-time buyers, provided that their remaining lives are sufficient after payment of monthly payments and that their debt ratio does not exceed 33% of income.

4- Borrower insurance sometimes costs more than credit

This is one of the perverse effects of low interest rates: borrower insurance that covers the risks associated with the death, disability or loss of employment of the buyer (s) ends up costing more than the credit itself. even. Example with a loan of 200,000 euros over 20 years won at 1.25% by a couple who has covered 100% each: the total cost of insurance amounts to 28,000 euros against 26,144 euros for interest credit. "This is because the vast majority of insurance is calculated on the borrowed capital, says Barnier, and remain fixed throughout the life of the loan.