the rate hike is accelerating

Property rates continue to rise in early March, according to initial analyzes revealed by specialist brokers. On the other hand, bank times are decreasing.

The trend continues. In early February, brokers noted that banks had begun to scale up their real estate rates, which had hitherto been low. A month later, the situation did not change. Indeed, the sharp rise in inflation has brought with it French debt securities, which serve as a benchmark for real estate lending rates.

Banks go mechanically pass on the rise on real estate rates, even if, for the moment, it is only partially reflected: market rates have gained 0.7 points since the beginning of the year, and we observe +0.2 or even +0.3 on real estate rates. This is a reflection of their high targets and the high level of liquidity available, explains Pierre Chapon, president of the broker Pretto. According to his forecasts, rates could still rise + 0.2% only in March.

The most penalized profiles

A projection confirmed by Emprunt-Direct, which records rate hikes around 0.15-0.3% after a month of February already marked by more measured increases. The most significant increases are observed in particular in the less qualitative profiles. In fact, the banks had, last month, started preparing their balance sheets in view of the first period of real estate solidity, which runs from March to June. The intense tension observed in interest rate markets for several weeks, coupled with the tighter prudential constraints since January, has thus overcome historically low rates, explains Alban Lacondemine, founding president of Emprunt Direct.

In fact, since the beginning of the year, banks no longer have, with some exceptions, to grant loans with a duration of more than 25 years, nor loans whose monthly payment exceeds 35% of the borrowers’ income.

Average rates in banks in early March

  • ON 15 years: 1.03% according to Meilleurtaux; 0.86% for the Partner; 1.12% according to Pretto.
  • ON 20 years: 1.17% according to Meilleurtaux; 0.97% for the Partner; 1.24% according to Pretto.
  • ON 25 years old: 1.33% according to Meilleurtaux; 1.13% for the Partner; 1.40% according to Pretto.

As a sign of this rate hike, online bank BforBank just raised the annual percentage rate (APR) of its standard mortgage offering from 1.63% to 2.12% for a € 350,000 25-year loan. a 30 year old customer. The monthly payment thus rises to € 1484.21 against the previous € 1403.43, that is 80.78 euros more. Eventually, the total amount of interest goes from € 59,653 to € 83,887. On the other hand, the cost of the borrower’s insurance (death, disability, incapacity), 11,376 euros, remains unchanged.

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Despite everything, we continue to believe that the upward trend in interest rates that began at the end of 2021 should remain contained, given the very high credit production targets of the banks and the excess liquidity they have accumulated. To remain competitive, they will have to continue to do so offer attractive real estate rates to private individuals, attempts by Olivier Lendrevie, president of Capfi. As a sign of competition in the sector, bank deadlines for issuing credit offers are decreasing. According to Cafpfi, it is now 14 days, which is 2 days less than in January.

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