“The Impact of Rising Mortgage Rates on Monthly Payments: Expert Analysis and Insights”

2023-04-28 06:29:00

For those who nevertheless take the plunge, we note that the average amount borrowed for the purchase of a home decreased slightly during the first quarter, to reach around €191,000. The amount for a construction loan also experienced a slight decrease to reach €207,000 in the first quarter. Finally, the average amount of a loan for a purchase-renovation once again saw an increase, after a decrease during the previous quarter, to approximately €201,000.

The rise in mortgage rates leads to a 36% drop in loans!

What impact on monthly payments?

The rise in rates naturally leads to an increase in monthly repayments, failing to opt for an extension of the duration of the credit. Let’s take the example of a couple who set their sights on a property priced at €330,000. In addition to notary fees, registration fees and fees for credit deeds (a total of more than €53,500), the “rule” that prevails in banks requires that he also has a personal contribution of 10% minimum (€33,000). The couple’s own contribution is therefore around €86,500. Let’s assume that he borrows €300,000 over a period of 25 years. Previously, with a rate of 1%, the couple would have had to repay €1,130 per month. With a rate currently negotiated at 3.50%, the monthly payment amounts to €1,493. Given the new rise in rates, around 4.50%, the monthly payment would amount to €1,652. For the same property, it is therefore an increase in reimbursement of €522 per month that the couple must bear, ie, over the duration of the loan, an additional cost of €156,600!

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