Rising mortgage rates encourage refusal of financing. In this context, the broker Vousfinancer notes that variable or mixed rates are making a comeback. They thus allow files to be passed without being blocked by the rate of wear.
At the beginning of September, average real estate rates are rather stable and are rising 1.5% over 15 years, 1.75% over 20 years and 1.90% over 25 years, but more and more banks are recording rates above 2% over 20 and 25 years, notes broker Vousfinancer. However, some have again experienced rate hikes from 0.10 to 0.20%, with overall increases since the beginning of the year reaching 1 point or more, Vousfinancer explains in his study.
The situation is absurd … These French have deprived their real estate loans because of the usury rate
But banks are increasingly blocked by the usury rate. The maximum rate above which they cannot lend is set at 2.57% for loans from 20 years and at 2.60% for loans under 20 years. In this context, variable rate loans are making a comeback. A solution to pass the practices that, at a fixed rate, would have been above the usury rate, therefore rejected, explains Julie Bachet, general manager of Vousfinancer. According to Vousfinancer, the variable rate loan rates are currently 0.40 0.60 points lower those fixed rates.
How do cap variable rate loans work?
Floating rate credit allows banks to offer real estate credit at an interest rate that will change. There are several variable rate formulas.
–Rates cap one or two points, which cannot increase by more than 1 or 2 points but can decrease in the event of a drop in the reference rate, or the Euribor, the short-term monetary rate applied between banks in the euro area. Vousfinancer reports an example of financing obtained with this option: rate 1.69% cap 2, over 25 years, (against 2.25% fixed rate) Toulouse for a single first buyer with 1400 euros of income, for a credit of 120,000 euros with a contribution of 27,000 euros
save up to 70% on your borrower insurance
–Mixed rates: fixed for 5 to 10 years, then variable ceilings for the remainder of the loan term. This system allows you to limit the increase in the rate at the beginning of the loan, when the interest rate is higher. Advantage: Once it arrives in the variable part, the asset can be resold and the loan repaid in early repayment penalties, explains Vousfinancer.
The broker reports that a couple of first-time buyers with 4,100 euros of income, for a loan of 230,000 euros, with 140,000 euros of contribution, won a rate of 1.43% in 20 years, in 6 years fixed, therefore variable (against 2% fixed rate).
Real Estate Credit: This forgotten product that can help you drop below the usury rate
These credits had all but disappeared with historically low rates … They represented 0.5% of loans in 2021but they could make their return later this year, says Julie Bachet, CEO of Vousfinancer.
It is therefore a solution for borrowers who are refused financing. But this solution still affects only a few banks and a few rows, Vousfinancer nuance.
Find the best rates for your real estate loan