The second half of 2020, although marked by the health crisis, made it possible to finalize sales (put on hold in March) and accelerate the digitalization of flows. Despite the maintenance of a certain dynamism in the mortgage market throughout the year, La Centrale de Financement noted a 20% decrease in the stock of new business carried out by the entire sector (real estate agents or mortgage players), compared to 2019 ...
This situation could nevertheless be offset by a start to 2021 which is particularly favorable to household borrowing: the conditions for granting credit are easing and borrowing rates are falling, especially on long-term loans (out of 20 and 25 years old)!
Thanks to the latest measures taken by the High Council for Financial Stability (HCSF), the French can now take out a loan up to a maximum of 27 years (25 years previously, for the loan in new buildings only) and carry, whether for old and new, their debt ratio at 35%, against 33% previously. They will also benefit from a slight increase in the wear rate.[2] since January 1, 2021, in particular on loans taken out over 10 to 20 years.
“The new measures taken by the HCSF correspond perfectly to the requests formulated throughout 2020 by the profession, including La Centrale de Financement. Cumulated with a slight increase in the usury rate in January, these measures allow us to envisage a more peaceful first quarter of 2021 ... And thanks to the overall decrease in lending rates over one year, the French will be able to borrow until 'to 10% more than the previous year! This particularly favorable situation for borrowing should not, however, mask the difficulties encountered by a certain number of employees who will probably no longer be fundable during the year 2021, because they work in sectors affected by the crisis: hotels, entertainment, events, aeronautic industry etc. We cannot underestimate either that, in this distressing period, some households will give in to the ambient gloom and risk postponing or even canceling their real estate acquisition projects ... but La Centrale de Financement remains confident because, with or without the crisis, the majority of French people will continue their life projects, the pillar of which remains the acquisition of real estate ... It is our job today to reassure and support these French households in their projects. "
Sylvain Lefèvre, President of La Centrale de Financement
A population that is structurally a generator of projects and a bearer of hope for the sector
At the same time, and despite the crisis, 70 to 80% of the French economy is still running, especially in the sectors least affected by the health situation. And, for many French people, with or without the crisis, life continues almost as before (life as a couple, births, professional development, etc.) and undeniably pushes them towards new real estate acquisition projects ...
“Beyond this structurally generating population of projects and bearer of hope, there is also another part of the population which is aging and which, at some point, puts its property up for sale to find an apartment in the city or a place in a retirement home. This too is a cyclical situation, and over which the crisis has no real hold ... These developments affect our economy, whatever happens. The Centrale de Financement is therefore counting on all this clientele as well as on the relaxation of the conditions for granting credit to maintain the dynamism of the activity throughout the year ... and all the more so since demand is still strong! "
Sylvain Lefèvre, President of La Centrale de Financement
The 2021 borrower: what profile?
Although the conditions for access to credit have eased, access to borrowing in 2021 requires a number of criteria, which will be difficult to ignore:
- Have a CDI, whose trial period has ended
- Have a little contribution, around 10%, which many households now anticipate in their procedures, in particular by resorting to financial support from their ancestors (donations).
"Despite everything, we still manage to relax the amount of the contribution requested, in particular for projects carried by households, whether they are first-time buyers or not, with an income of more than € 50 per year, debt at - below 000% and a loan not exceeding 33 years. "
Sylvain Lefèvre, President of La Centrale de Financement
January 2021: lower rates!
In order to support the demand for real estate loans at the start of 2021, the banks are reducing credit rates for all loan terms, especially for long terms (20 and 25 years).
Thus, with the rates announced in January 2021, a borrower taking out a loan in the amount of € 180.000 over 25 years at 1,33%, will see his monthly payment amount to € 705.6 for a total cost of credit of € 31.680.
Rate development
Average mortgage rates for January 2021 by loan term
The interest rate conditions generally observed are down 0.04%, on average, for all loan terms combined. In detail: for loans over 10 years, lending rates have decreased by 0,03%, compared to the previous month, by 0.01% over 12 years and 0.04% over 15 years. The most significant decreases in credit rates are observed mainly for loans contracted over 7, 20 and 25 years with a decrease in credit rates generally observed by 0.06%, compared to December 2020.
The best real estate rates for January 2021 by loan term
The best rates obtained in January 2021 are more advantageous than those obtained in December 2020, for loans contracted over 7 to 12 years, with a drop of 0.08% in rates obtained, for loans with a term of 7 years, a decrease of 0.04% for those over 10 years and of 0.01% over 15 years. For loans taken out over 15 to 25 years, the best rates obtained in January 2021 remain stable and identical to those of the previous month.
Profile of borrowers who completed their project in December 2020
[1] Source: Notaries of France
[2] Fixed at the end of each quarter by the Banque de France, the usury rate protects the borrower against rates above this ceiling rate, the exceeding of which could place the borrower in a difficult financial situation. Since the start of 2020, it has fallen twice and has approached the average rates charged by banks, thus generating a scissor effect (with the increase in rates during the crisis, the difference between the APR and the wear rate have been reduced: this is the scissor effect). Under these conditions, the borrowers reached the usury rate more quickly, thus leading to the refusal of their mortgage.