The report of the CSA / Astro Finance observatory for October 2015 reports an increase of 3 basis points in the average mortgage loan rate. But as this same report explains, this is only an illusion because this mathematical result represents the influx of first-time buyers on the housing market. Good Finance announced in a previous press release that many banks have already lowered their own rates over periods of more than 20 years.
They thus wish to address young households, because the under 35s earning less than 3 times the minimum wage are the most numerous on the housing credit market.
Home mortgage rates remain stable in the old
Banks do not book the same rates, depending on whether it is new or old property. In the first case it will be necessary to carry over a monthly payment until the delivery of the keys. This postponement leads to an increase in the cost, borrowing for the old therefore generally costs less than for the new.
The October 2015 version of the CSA / Astro Finance observatory notes that the average property rate remains stable at 2.24% for home ownership in the former. On the other hand, it goes back to 2.31% for new home buyers, and more generally to 2.22%.
It is therefore clearly a phase of stabilization of housing loan rates, which may even lead in the short or medium term to a further fall in rates. The report notes that banks broke away from 10-year French bond movements during the Greek crisis. While in July and August government bonds increased by 76 basis points, mortgage rates only gained 17 points.
These young middle-income borrowers
The banks have already started working to reach their 2016 targets. It must be said that there is time between applying for a mortgage and actually paying the borrowed funds. Thus households starting their approach today will be granted their funding in 2016. The banking brands are therefore taking action now, and all target the largest clientele.
In new real estate, households under 35 represent 47.20% of first-time buyers. However, they were more numerous in 2009, when they represented 52.7% of new owners. Besides, at that time they were 43.9% earning less than 3 times the SMIC, today their proportion has dropped to 37%.
It must be said that house prices do not help them. With a budget sometimes 30% larger, many of them find it difficult to keep up with the presence of the PTZ +. The year 2016 could also be a better year for promoters, because the president Mr. Fillar announced the widening of the loan at zero rate.
In old real estate, these young households are also the most numerous. Those under 35 represent 43.3% of first-time buyers, which is still much less than the 62.3% they were in 2009. And these are again the less than 3 SMICs who represent the largest borrower pool. In 2015, they are currently 37.7% of buyers, just ahead of senior management households earning 5 times the minimum wage and more, which account for 25.5% of purchases of old real estate for residential purposes.
The CSA / Astro Finance report also highlights the return of its first time buyers to the market. Because if the average borrowing rate is rising, it is not due to the tightening of lender conditions, but to the influx of these young households into bank branches.
They borrow for long periods
If the banks are particularly looking for the clientele of young first-time buyers, it is in order to establish a long-term relationship. With real estate rates historically at their lowest for several decades, they run almost no risk that these new customers will seek a cheaper credit repurchase elsewhere later.
They are therefore ready to make efforts, in particular by asking them for less personal input. In the former, the required starting capital decreased by -6.7% over the first 10 months of 2015, compared to the same period last year. Recall that it had already decreased by -3.9% in 2014. In new real estate the effort is even greater, the personal contribution required by the banks fell by -9.2% since the start of the year, after a decrease of -7.5% in 2014.
But to be able to offer a repayment plan to match the borrowing capacity of this young clientele, it is necessary to arrange attractive rates over the long term.
Thus, borrowers under 35 years are 36.9% to choose loan contracts over 20 to 25 years. Behind come repayments of 25 to 30 years for 26.8% of borrowers, while almost tied come the durations of 15 to 20 years with 26.4% of the market.
By comparison, among 55 to 65 year olds, who are traditionally the second-time buyers, 42.8% of borrowers choose credit contracts over 10 years to 15 years. Those under 35 are only 7.5% taking this option.
Average real estate rates of 1.80% to 3.17%
Floating rate mortgage loans, stars of 2004 when they represented 22.1% of the market, are now only used by 0.6% of borrowers. Because they are no longer necessarily interesting. Over 25 years, the worst profiles will get an average of 2.68% in variable, while over the same period we will get 2.64% in fixed.
Despite the rise in real estate rates observed since June, borrowing to buy your main home or to invest in rental property remains as inexpensive as it has never been in decades. According to the CSA / Astro Finance observatory, the average of the best borrower profiles over 20 years stood at 2.01% in the 3rd quarter. This therefore includes the inflationary movements of this summer, but at the moment we continue to borrow at less than 2% in certain cities of France.
As for the worst profiles, they were content with 2.79% on average, still over 20 years. But rest assured, the average borrower in the 3rd quarter of 2015 was able to finance his real estate project at 2.36% on 240 monthly payments.
If he had chosen the variable rate, he could have obtained 2%, but he did not do so because he prefers the security of fixed maturities, at the risk of rising rates.
And yet this risk is further and further removed after the promise of the Director of the Cream bank, Mr. Dough, to make more efforts if necessary. The reactions on the markets were not long in coming, and today banks can finance themselves even cheaper than 2 weeks ago.
Good news for all these young households wishing to become owners, now the door of the banks is wide open to them.