Real estate credit: rates do not stop falling in April
Mortgage interest rates are once again down with 1.35% on average (without guarantees or insurance), regardless of the duration of the loans.
Low rates not far from the record
It’s a refrain that has been repeated since the beginning of the year to the delight of the French. Mortgage interest rates fell again in April to reach an average value of 1.35%. Is this the sign that it is appropriate to start a real estate purchase project? In this case, it seems that the credit market is in an exceptional phase for borrowers seeking to become homeowners. Rates continue to approach the lowest level ever recorded. Indeed, the credit observatory indicates that the month of November 2016 was that of all records with an average rate of 1.33%, a gap of almost zero with the month of April 2019.
If close to this historical threshold, it is certain that homes that currently want to buy a home will do a good job at this time. To negotiate the best rate for a mortgage, a number of conditions are however to meet. Indeed, banks are likely to grant extremely low rates to borrowers with quality profiles.
If the solvency is basic, the management of the accounts, the amount of monthly income and already existing assets are decisive as the duration of repayment chosen. The lower it is, the lower the rate will be. And to attract this type of qualitative customer particularly sought after, professionals do not hesitate to break the cost of credit by offering rates below 1.20%. For example, the average rate for a loan amortized over 15 years was 1.09% during the month of April.
Real estate offers accessible to modest income
But historically low rates are not exclusive and modest households are also able to borrow at attractive costs. Generally, they have to lengthen the term of the loan over twenty years. And rates are still appetizing on this point because the average is 1.27% over 20 years and 1.49% over 25 years.
For households that do not have sufficient capacity, institutions are also willing to increase the duration of the credit beyond the 25-year period, especially to maintain a sufficiently high level of production of outstanding loans. This situation leads to an increase in the average duration of mortgages at record levels. Indeed, the loans granted never lasted so long in April with an average of 229 months. Compared to the very beginning of 2014, this is an increase of 30 additional months which shows that banks are more flexible in terms of credit duration.
Low rates that encourage the purchase of home loans
With these particularly tempting rates, the French are not mistaken and are moving en masse to a mortgage solution. The bank specifies in one of its latest publications that outstanding home loans amount to more than 1 000 billion euros in the country. No wonder that the population is therefore interested in renegotiating with their lender or the purchase of real estate credit to reduce the interest rate and earn up to several thousand euros over the total life of the loan.