And if the euphoria in the real estate market was about to end? While prices and the number of transactions have reached record highs since the start of the Covid pandemic, borrowers now face an increasingly glaring problem: access to credit. In fact, average loan interest rates are constantly rising: after falling below the symbolic floor of 1% in December (for 20-year loans), according to the Crédit Logement observatory, they are flirting here or even now exceeding the 1.5% bar, many brokers report . Most of them also expect an inevitable continuation of interest rate hikes, which could thus reach 2% or more by the end of 2022. The consequences are clear for buyers: Credit costs will probably – and barring an unpredictable turn – explode within a year.
Home loan: how the increase in rates will inflate your monthly payments at the end of the year
But above all, in addition to costing more, mortgages are now simply … out of reach for many households. In fact, there is a Global Effective Annual Rate (TEAG), more commonly known as the wear rate, beyond which it is legally impossible to provide a line of credit. In the second quarter of 2022, this rate was set at 2.4% for mortgages of 20 years and over. However, this maximum rate takes into account the cost of all-inclusive credit, that is, it includes borrowers’ insurance, administration fees or even brokerage fees. The accumulation of these costs, for the most fragile files, often becomes prohibitive to get a loan. This effectively excludes many borrowers from the credit market.
Property credit: why it will be even more difficult to borrow in the coming weeks
Société Générale and Crédit du Nord suspend part of the cases
In this context, the average interest rates are so close to usurious rates and the margins expected by banks are so low on these files that some now prefer… to limit the number of loans they make. According to our information, it was the case that two companies, Société Générale and Crédit du Nord, temporarily suspended the production of credit with brokers. Brokers who, according to the Professional Association of Credit Intermediaries (APIC), represented between 37% and 40% of the files submitted by borrowers in 2021. “Société Générale continues to offer loans to its customers and examines their personal situation on a case -by -case basis”, is limited to communicating the bank. Société Générale and Crédit du Nord nevertheless refuse to confirm or deny having suspended the issuance of credit to the brokers’ clients, despite our reminders. “I can confirm that these two banks have suspended the production of credit through brokers”, but insists a first professional in the sector. “Two major banking institutions have just decided not to accept any more files because of this regulatory hurdle,” explains another player.
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Other banks, more mischievous, do not officially suspend the files … but offer such high net interest rates that in practice it becomes very difficult to borrow from them. “Some companies have price plans of 2.10%: gold, at these levels it becomes very difficult to finish the files”, thus suggests the representative of a major brokerage network. “The banks’ networks are now changing very quickly and their offers are valid for a very short time: borrowers must sign very quickly if they get a loan”, this broker now advises his clients.
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