However, the key rate hike by the ECB was planned, announced in advance by its President Christine Lagarde and largely anticipated by the banks. At +0.5%, however, it was higher than expected, although many observers only expected half of it. This is clearly bad news for borrowers, whose interest rates and difficulty in finding finance should rise. “There will be a scissors effect believes Catherine Saint-Geniest, partner in charge of real estate law at Jeantet, as credit conditions have not stopped climbing and are nearing their maximum while interest rates continue to rise and the HCSF exercises drastic control over the banks.”
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A situation that will also contribute to a certain slowdown in activity. “We are already seeing a price drop and a slowdown in operations between a wait-and-see attitude on acquisitions, growing funding difficulties and the current deadlock on new construction given the increased construction costs”, Me Saint-Geniest continues. But if these elements of rate hikes have already been largely anticipated and incorporated by banks, inflation could well complicate the deal. Especially if salaries and income are not progressing.
Only wealthy young people in good health can take out loans
“The market is completely blocked, mainly by the attrition rate, for his part, regrets Maël Bernier, spokesman for the broker MeilleurTaux. The only ones who can continue to borrow are 35-year-old profiles with good income and the opportunity to reduce insurance costs. Maël Bernier, while acknowledging that this decision is not an event in itself, believes that the banks’ room for maneuver has been significantly reduced. “The banks have not recovered their level of profitability, she points it out. They are now lending at 2% or even 2.2%, whereas based on the first results we should be closer to 2.7%, but they are way too close to the current usury rates.
A glimmer of hope, however, other major home loan interest rates, OATs, have eased somewhat. The fact remains that, according to Makler, we are slowly but surely moving towards 2.5% over 20 years. Will this rise in interest rates not quickly be accompanied by a fall in prices? “For that to drop significantly, there must be a lot of stomach ache in the market, explains Maël Bernier. However, that is not the case.” She also notes that while prices for apartments in mid-sized cities are falling, the same is not true for houses. As for second-hand buyers that could stimulate the market “They’d rather stay warm first.”