With 1.29%, the historical record of the average interest rate was beaten in May 2019. For the French, it is an opportunity to borrow a mortgage at a lower cost. But what about the most modest?
Access to credit and low rates are not just for the rich
The lights are green for the conditions of financing a property with the lowest average rate in history in May. But while banks are obviously looking for quality customers by providing credit to high-income households, the smaller ones are also borrowing at extremely low rates. In concrete terms, this means that the low cost of credit does not exclusively benefit the better-off. Good news for the French who earn average income but still want to access the property. vrpsp.org for more.
This finding is supported by the housing observatory mentioning the largest decline from May 2018 to May 2019 levels on behalf of borrowers from the 4th group, those at the head of the lowest incomes. In fact, the average borrowing rate during this period went from 1.55% to 1.28% over 15 years, from 1.72% to 1.47% over 20 years and finally from 1.96% to 1%. , 66% over 25 years. If the average rates granted are lower for the higher categories, none of them will benefit from such a large decrease in the space of one year.
Better rates for real estate loans without contributions
But then, who are the borrowers inserted in this category? Mostly, these are people with relatively low resources, but also those whose files are the most difficult to finance. Here, applications for real estate credit without contribution with low income are for example to be inserted in this category. Very often, the contribution is necessary to pay all the additional expenses such as the notary fees, the transfer duties as well as the expenses of file required by the bank.
When a borrower manages to obtain a home loan whose amount is used to acquire housing and to pay the contribution (about 10% of the price of a good), the professionals then speak of a 110% financing. These types of files, more complicated to succeed, are most often found among first-time buyers. These are the young borrowers who sometimes did not have the time to save enough money to pay for a home loan. Depending on the repayment terms, these young people, but not only, can therefore benefit from a much lower cost of credit than a year ago.
Increase the duration of credits for modest French people
But how do banks manage to match their criteria on these more complex profiles? Generally, the method will consist of making a mortgage loan amortized over a longer period. Rather than lending on 20 years, it will extend the credit to 25 years, for example, for the more restricted income become eligible without jeopardizing their budget and their debt ratio. This trend has been visible for a number of years, with the average duration of loans increasing steadily. Last month, it was at its highest level with 228 months.