What if mortgage rates go down? The question may come as a surprise as interest rates are skyrocketing. All maturities together average 1.68% according to Observatory Credit Housing / CSA. A year earlier they were just over 1%. You can expect an average of 1.57% over 15 years (excluding insurance and guarantees), 1.69% over 20 years and 1.79% over 25 years. According to brokers, average interest rates can even rise above 2% over 25 years and even approach them over 20 years.
In short, borrowing to buy a home is becoming more and more expensive. And yet, at the same time, the rate at which the state is borrowing on 10-year debt continues to fall after having skyrocketed. In a month and a half it has almost halved, from 2.35% to 1.21% today. What report are you telling me? This indicator, called OAT, is taken into account by banks when setting their mortgage rates. If we assume that the latter rose sharply as OAT soared, can we expect lending rates to fall due to the easing of France’s borrowing rate?
A few rate cuts in September?
Theoretically yes, but the reality is different. The rising cost of liquidity (the price banks pay to refinance) has put pressure on banks’ margins. “Some companies that refused to cut their margins have had to choose to exit real estate lending.”, says Pierre Chapon, founder of Pretto, mortgage broker. As for the others, most had no intention of lowering their rates in the first place. Banks won’t raise them at best, brokers say. “Banks will instead use this drop in OAT to rebuild their marginssays Sandrine Allonier from Vousfinancer. For banks that are lagging behind on their production targets, some declines can be expected in September, but I don’t think so“.”The interest rate decay is over for at least 4/5 yearsconfirms Bruno Rouleau, President of the Professional Association of Credit Brokers (Apic). Still, we can’t rule out some bumps to dampen the sharp rise we’ve seen in six months.“.
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However, these fee reductions would be welcome in a context where rejection of files is increasing. Nearly one in two brokers (exactly 45%) confirm that the rejection rate for the banks they submit to banks is between 20% and 30%, according to an Opinion System survey published by Apic. “Never seen!‘ said Bruno Rouleau. The blame for the maximum rate at which banks can lend and which is exceeded for those thousands of rejected files. Consequence: According to Crédit Logement, the number of loans granted fell by more than 11% between May-July 2021 and May-July 2022. “We see both a decrease in demand, associated with a wait-and-see attitude by buyers, and a decrease in the supply of credit, with banks being less encouraged to lend, in this context with a decrease in the profitability of the loans granted», Analyzes Bruno Rouleau.
On the Banque de France side, the discourse is less alarmist. His governor expecting interest rates to rise soon”between 2% and 3%“, believes that these prices “absolutely nothing special“.”The old circumstances were. We are moving towards more normal financing conditions that will not prevent real estate from financing itself well”, François Villeroy de Galhau recently explained on BFM.
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