will it impact credit rates?

In line with February, mortgage interest rates continued their upward movement in March, unrelated to the war in Ukraine.

In the opinion of real estate credit intermediaries, the current environment is currently not taken into account in the granting of loans and in the levels of borrowing rates.

In order not to burden an already complicated situation linked to inflation, the upward trend in rates could even slow down a bit. But a rate hike could potentially occur if France were too involved in the conflict.

An upward movement in rates since the beginning of the year

Credit rate increases have spread since the beginning of the year. A phenomenon that is not related to the invasion of Russia in Ukraine. “The banks announced to us at the beginning of January a gradual increase in their credit rates by an average of 0.10% each month, explains Maël Bernier, spokesperson for the MeilleurTaux real estate loan broker. They would thus have reached 1.30% in May-June, against 1% in December. But this scenario was before the conflict in Ukraine. “

The same observation for the Vousfinancer broker who observes significant increases: “After a month of February already marked by rate hikes, these are accentuated in March, with banks having raised rates by 0.20 points on average and up to 0.50 points for a regional bank. This is unprecedented, says Sandrine Allonier, director of studies at Vousfinancer. Some have increased them by 0.80% in two months, from February to March. “

The drops seen last year are over.

The reasons for this upward movement: the rise in public loan rates (10-year OAT), which serve as a benchmark for personal loan rates. Public borrowing rates thus rose from 0% at the end of December 2021 to 0.75% in February 2022 – a level that had not been seen since the end of 2019 – and then fell back to 0.45% at the beginning of March 2022. Their increase is equal linked to inflation (3.6% in February over one year, according to INSEE).

“No direct impact to date”

For now, the current geopolitical environment does not appear to be hampering mortgage debt. “No bank has so far mentioned the war in Ukraine. We see no direct impact on French finance, Vousfinancer’s Sandrine Allonier points out. Banks will not turn off the credit tap, they still have high credit production targets. It is not the 2008 crisis, which was a loss of confidence in the global financial system. “

But possible effects …

The Russian offensive in Ukraine has generated instability on the financial markets, with volatility and a collapse of the stock market (last Friday Paris recorded a loss of 3.35%, Frankfurt of 3.76% …).

“The conflict is weakening bank stocks, which have fallen more than the CAC 40 average. There is therefore still an impact on bank finances, notes Sandrine Allonier. Will they raise their credit rates to offset the decline in the stock market? That, I don’t know. What is certain: the collapse of the stock market indices linked to the war in Ukraine accentuates the safe side of real estate. This is an even greater and positive attraction for the stone which would maintain the dynamism of the market.

For Maël Bernier, “the banks will observe the international situation. The expected rate hike will perhaps slow down a bit so as not to burden the market. But in this unprecedented current context, making predictions about the future is very complicated. “

However, a negative impact could occur if France were too involved in this war or if there were doubts about Europe’s ability to overcome the conflict.

“When there are severe economic or political shocks, there could be a rise in government lending rates because the risk to investors therefore appears higher, notes Sandrine Allonier. In this case, this could lead to a rise in mortgage rates. This is what happened when there was the crisis in Greece. “

What if inflation continues to rise?

If inflation is too high, the European Central Bank (ECB) raises rates, with the aim of keeping inflation around 2%.

But if the war in Ukraine has had the effect of reducing the purchasing power of the French, due to the already visible increase in the price of raw materials (oil, gas, etc.), it is likely that the ECB will continue its policy. to support the economy, not by increasing its tariffs. That would be good news for mortgages.


A still dynamic real estate market

Despite the increases in mortgage rates, according to brokers, you can still borrow in 20 years at an average rate of 1.20% according to MeilleurTaux, 1.30% according to Empruntis or even 1.35% according to Youfinance.

“Mortgage demand is as strong at the start of the year as last year at the same time,” said Maël Bernier, spokesperson for MeilleurTaux. 2020 and 2021 were two record years in terms of real estate transactions, while we were confined. In times of crisis, stone remains a safe haven. “

So much so that in France property prices have soared (+ 7.1% in 4And quarter 2021 in a year according to notaries), especially in medium-sized cities, where many buyers have abandoned large cities.

“We shouldn’t expect a drop in prices, says Maël Bernier. The demand is still there and there is a lot of pressure on certain types of properties, such as garden houses. “

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