Real estate credit: should we be afraid of rising rates, is it the right time to buy?

After years of stagnation at very low levels, rates are steadily rising. A fair return to normal?

All mortgage professionals recognize this: the rates charged in recent years have been at “abnormally” low levels. This had the effect of attracting many buyers… but also resulted in an increase in housing prices due to cheap money. Over the past few weeks, we have seen an increasing trend in rates.

And, if we believe Maël Bernier, Meilleurtaux’s site’s communications director, “the increase in rates is really there and for good”. Consequence: “The bullish scales received since the end of March prove that borrowers will face a more complex situation than they have been accustomed to for several months now”. Should we worry about it? Midi Free is in stock.

1. What are the upside levels?

“Concerned all profiles and all durations, from average file to good profile, we notice in Meilleurtaux. Rates are rising faster than expected and the trend is confirmed daily. The bullish range is between + 0.15% and + 0.45% ”. The average rates are therefore approximately 1.20% over 15 years, 1.35% over 20 years and 1.50% over 25 years at the beginning of April.

But, “it’s not really impossible that we’ll receive other bullish scales that will further push the figures observed at the beginning of the month”. In the region, Meilleurtaux teams noted rates of approximately 1.01% over fifteen years. Against 0.89% in the southwest. And even 0.75% in the larger Lyon region.

2. Should we worry?

Despite the increase, rates are still low. “This is to be expected. Rates are so low that they can only go up”, insists Julien Gros, inside the Montpellier company Crédit2L, which specializes in credit renegotiation. He added: “Although the increase may seem brutal, rates are still low, reasonable”.

Added to this is the reminder of the High Council for Financial Stability (HCSF), which has imposed an effort rate on borrowers limited to 35% of their resources. It was previously set at 33% of revenue. “Potentially, we will now find a borrower who cannot be financed by a bank, acknowledges Sébastien Baggio, director of the network at Banque Populaire du Sud (BPS). However, this remains rare.

But, more importantly, we probably won’t have to develop a specialized project because our mission is to find solutions for our customers. ”He also agrees:“ Compared to the last 20 to 25 years, we are still at a low level. and attractive bases for the client. ”Finally, the head of BPS recalls this important element:“ you have to always compare the value of money to inflation. ”Result:“ 1.5% over 10 years vs. with 3% to 5% inflation, this is a good deal for the borrower ”.

3. Is the increase temporary?

Expert at Nîmes company Patrimoine Invest, Jean-Jacques Lafont believes that “the rate hike is structural, it won’t be there in just a few months”. He insisted: “we must live regularly with rate increases in our daily lives”.

He also reminds us that real estate is a story of cycles. “A few years ago, we borrowed at rates of 4.5%, even 6%. So, as of now, less than 2%, it remains very attractive and interesting to borrow”. He stressed the reality of “bringing competition between banks”. And to achieve this, “the best thing is to rely on brokers who negotiate with bankers to get attractive rates. They have the broadest insight into the market”. Because “all banking establishments are not required to take credit”.

“This is the right time to buy”

President of the Syneos network, a national real estate group headquartered in Saint-Jean-de-Védas, in Hérault, Hélène Fraysse believes “now is the time to buy”. In fact, he added, “rates should continue to rise to reach 2% to 2.5% by the end of the year, therefore it is advisable to take advantage of rates that are still relatively low”. Especially, he continues, that “increasing rates could lead to lower prices”. According to feedback from network agencies, “it seems that candidates for the purchase are currently showing a certain attitude to waiting.”

4. What are “good” rates?

The Meilleurtaux teams estimated what, due to observing the different levels of rates produced, what rates qualified as well across the Mediterranean. For a term of 7 years, the “excellent, but rare” rate would be 0.69%. Otherwise, a “very good” would be 1.06% and a “excellent” at 1.16%. Over 10 years, it is, respectively, it is 0.75%, 1.07%and 1.2%. Over 15 years: 1.1%, 1.3%and 1.48%. Over 20 years: 1.23%, 1.43%and 1.55%. Finally, over 25 years (maximum duration): 1.35%, 1.57%and 1.65%. Note that most of these rates have risen in recent weeks.

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