Mortgage: Interest rates still very low, but the number of loans granted is weakening

The data from the Observatoire Crédit Logement / CSA for the month of January have just been published. What you need to remember.

The average rate for a mortgage in January 2022: 1.07%

Despite the persistence of inflation and the intensification of tensions on the bond markets, banks are maintaining interest rates at exceptionally favorable levels, for the 10th consecutive month, at 1.07% in January.

The aim remains to limit the consequences of the tightening of the conditions for the granting of loans to individuals imposed by the French banking supervisory authorities, the strict application of which now weighs heavily on their offers.

In January 2022, all borrowers were able to benefit from a lower rate than inflation (harmonized price index, HICP) which stood at an annual rate of 2.28%. With, for example, an average rate of less than 1% for all borrowers in the 1st group, which includes 25% of the borrowers whose rate is the lowest.

The average duration of a mortgage in January 2022? 242 months

The average duration of home loans stood at 242 months in January. In January 2022, the increase in the average duration of the loans granted persists, i.e. more than 15 months for a year. It has never been higher in the past: for example, while this lifespan was 13.6 years in 2001 (163 months), it is now averaging 20.2 years

Long durations make it possible to absorb the consequences of the rise in house prices and to cushion the impact of the increase in the required personal contribution rates on the ability to access credit.

The number of loans granted in January 2022 is down by 9.2% compared to January 2021

In 2021, after a rapidly growing first half, business slowed sharply during the summer. Furthermore, at the beginning of the school year, production did not register a real recovery: the tightening of access to credit was progressively strengthened and generalized. And at the end of December 2021 on a rolling semiannual basis, production decreased by 4.9% yoy and the number of loans by 6.3%.

In January 2022, as part of a rigorous application of HCSF recommendations, the number of loans granted further weakened :
– 9.2% in January 2022 compared to January 2021. However, due to the use of higher average borrowed amounts, credit production in amount increased by 5.0% in January, Year after year. Indeed, buyers have a higher personal contribution but buy more expensive housing and therefore borrow higher average amounts.

The activity measured in mobile annual terms could therefore still show positive developments at the end of January 2022: with year-on-year growth, + 7.2% for production (compared to -18.9% a year ago in the same period) and + 4.8% in the number of bank loans granted (-19.1% a year ago).

New baseline for 2020 – January 2022

The developments that have taken place since the early 2000s have profoundly transformed the market for real estate loans to individuals (excluding the repurchase of loans). Interest rates have fallen rapidly, loan terms have lengthened and conditions for granting loans have evolved.

In order to take into account all these developments and integrate their consequences in the determination of all the indicators that the Observatory publishes, the weighting basis of the information extracted from the production of Crédit Logement is regularly updated.

The new base, called the “2020 base”, was defined by reconstructing the structure of the credit market in the years from 2015 to 2020 using the annual surveys of the Housing Finance Observatory carried out by the CSA Institute.

The taking into account of this new basis did not substantially change the levels of the monitored indicators. The new series called Base 2020, as well as the updated methodological note, are available on the website www.lobservatoirecreditlogement.fr.

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