In March, the first scales received show, for some, an unprecedented rate hike in 2021, in the wake of the rise in 10-year government bond rates (10-year OAT), which have been rising since the end of the month. from February. However, the banks have liquidity to place and high credit production targets in a less dynamic market than it was a year ago, which should encourage them to maintain attractive rates to attract new customers. .
First rate hikes in March since the end of 2020 …
In March, for the first time of the year, some banks raised mortgage rates posted in their scale, by 0.10% on average. However, this movement is far from generalized: in a large national bank, the rise only concerns the less good profiles, and other institutions have continued to lower their rates or have left them stable. “In March, there were a few rate hikes posted in certain banks and for certain profiles… However, there is nothing to indicate that this is the start of a movement of increases for the moment. EIn fact, banks have high credit production targets in a less dynamic market than it was at the start of last year, which should encourage them to continue offering attractive rates to attract new customers with the same rate reductions that can still be close to records for the best profiles! “ notes Julie Bachet, Managing Director of Vousfinancer.
For now, average rates remain stable at 1.05% over 15 years, 1.25% over 20 years and 1.45% over 25 years but we can get at best 0.55% 15 years, 0.80 % over 20 years and 1% over 25 years, rates close to historic records at the end of 2019.
In the wake of the rise in government borrowing rates in February …
These rate hikes come in the wake of the rise in 10-year government bond rates (10-year OAT) from -0.3 at the end of January to 0.02% at the end of February, the first symbolic return to positive territory since June 2020. In several countries, whether in the United States or in Germany, the prospects for an economic recovery that may be accompanied by a return to inflation in the short or medium term are leading to an increase in government borrowing rates.
However, even if in France, the 10-year OAT rate serves as a benchmark for banks to determine the level of fixed rates, the current context marked by ECB policy, excess liquidity and production targets. of high loans could lead banks not to fully pass on this rise in government borrowing rates : Banks currently have very significant liquidity that they need to invest. Doing so with the European Central Bank is risk-free, but represents a cost, as the deposit rate is negative at -0.5%. They therefore prefer to invest their liquidity by lending to individuals, especially since despite the economic context, to date, the default rate on mortgage loans remains low, even if profitability, at this rate level, is also low. . But as long as there are no investments offering a better risk / return ratio than real estate credit, the banks will have the same strategy: an offensive policy on real estate credit which will lead them to maintain attractive rates, in particular on mortgage loans. better profiles, less risky.
Thus between August 2019 and December 2019, the 10-year OAT rate fell from -0.40% to zero in a few months, while at the same time, mortgage rates fell by 15 basis points ( from 1.40% to 1.25% for 20-year loans), testifying, in a context of rates remaining very low, the lower correlation now between government borrowing rates and mortgage rates.
A slight relaxation on the conditions for granting credit …
Now all banks agree to go up to 35% debt, insurance included … Thus, thanks to the increase in the debt ratio, a couple with € 5,000 in net income per month can repay € 100 more each month (€ 1,750 monthly payment, against € 1,650 at 33% debt). With rates going from 1.70% over 25 years in February 2020 to 1.40% currently – (+ 0.30% insurance), he can thus borrow € 417,000 including insurance against € 380,000 a year ago, ie € 37,000 more! Overall, most banks included insurance in the calculation of debt… but with a certain flexibility for some. This could be a lever to have a margin of negotiation and to have files accepted at 33% of debt excluding insurance because things were not written in black and white … now it is no longer possible ….
“Since the beginning of the year, there has been an easing in the granting conditions, the degree of which varies however from one bank to another, even if they remain on the whole very vigilant to the profiles of the borrowers with whom they are more flexible. Thus, some banks agree to lend again more than 100% of the value of the property, therefore without personal contribution, but only to borrowers who have high incomes, savings after project or to certain young people with high potential. The passage of the flexibility margin from 15 to 20% of banks’ production really has an impact, but above all for buyers of their main residence and first-time buyers, very little for investors, as recommended by the HCSF ” concludes Julie Bachet.