Mortgage rates are rising. We give you the reasons. (Credits: © Andrii Yalanskyi – stock.adobe.com)
Obtaining a mortgage is a big step in the life of a household. But since the beginning of the year, certain data suggest that this access to borrowing will be increasingly difficult.
By MoneyVox,
A debt ratio limited to 35% and a maximum financing period of 25 years, with rare exceptions: the new rules of the High Council for Financial Stability (HCSF) are already imposing additional constraints on banks. For some customers, access to mortgages has become more complex, particularly for first-time buyers and the most modest households. Since the beginning of 2022, three figures have raised fears of a tightening of access to mortgages.
1. Real estate interest rates are rising
1.09%: here is the average interest rate for real estate loans obtained in February 2022 according to the Crédit Logement-CSA observatory. A rate still low, but which has begun to rise. By way of comparison, this rate was 1.04% in October 2021, then 1.07% in January 2022. Without being able to speak of a surge, the significant increase in real estate rates sets the trend and raises fears of further increases in the coming months.
The Crédit Logement-CSA observatory nevertheless qualifies its analysis according to the duration of the loan. If, all durations combined, the average rate is 1.09%, over longer durations, the increase is less clear. And the reason is simple: “Banks always seek to preserve access to credit for first-time buyers and certain first-time investors”. Thus, over 25 years, the average interest rate was 1.17% in February 2022, compared to 1.13% in December 2021. Over the same period, real estate loans taken out over 20 years crossed the symbolic bar of 1 %, going from 0.99% to 1.03%. And over 15 years, the average rate is now 0.93% once morest 0.86% last year.
2. The number of accepted files is decreasing
In parallel with an increase in the nominal interest rate for mortgages, the Crédit Logement-CSA observatory has noted a decrease in the number of loan files accepted. Compared to the same period in 2021, the months of January and February 2022 saw a 1.5% drop in the number of loans granted. It was the month of January in particular that was strongly impacted. Consequence of the implementation of the rules of the HCSF? It is difficult to establish a link, but the observatory recalls in particular that January and February 2021 had been impacted by the health crisis linked to the coronavirus. For a fairer comparison, we will therefore have to wait a little longer. On the other hand, in volume, the amount of real estate loans granted evolved positively, in connection with an increase in real estate prices.
3. The duration of real estate loans is getting longer
For many years, the duration of home loans has been getting longer. The Crédit Logement-CSA observatory thus recalls “that it was 13.6 years in 2001 (163 months), it settled at 19.9 years in February 2022”. Several factors are involved. First of all, the increase in land prices, which required an adaptation of the loan term. It is also possible to underline the need to comply from now on with the rule of the 35% debt ratio. And to reduce the monthly payment of a loan, the most important variable is the duration of the financing granted.
The longer the duration, the lower the monthly payment, and the lower the debt ratio. It is also for this reason that more than 63.7% of real estate loans intended for the acquisition of a principal residence are granted over a period of between 20 and 25 years. A figure that the observatory comments as follows: “This is the highest proportion ever observed”.
