Since March 2012, banks have been monitoring their credit rate scales with particular attention. Indeed, the 20-year mortgage loan rates continue to fall. They are even currently less than 4%. Does this continuing decline suggest a return to the upside? Are there any more loans? We bring you some insights on this phenomenon.
Cost of mortgage loans down
In some ways, borrowers can rejoice; borrowing rates continue to fall. A continuous decline that has already been observed for several months.
In February, the 20-year credit rate was 4.25% and in June it had continued to fall to 4.05%. And, in this month of August, it has just dropped below 4%, reaching 3.90% (3.25% over 10 years).
It is important to specify that these rates appear in the scales of banks before negotiation and excluding insurance. Thus, the real and final cost of the mortgage can vary downward or upward.
The phenomenon of falling mortgage rates
If the credit rates are still falling, it is in particular due to the drop in the key rate of the European Central Bank because this direct rate has an effect on variable credit rates and only by its competition with credit to fixed rate, it also causes the latter’s rate to fall.
However, it should also be noted that this fall in rates is accompanied by a fall in loan volumes granted. Indeed, even if the mortgage rate is falling, this does not mean that more French people can take advantage of it.
The conditions for accepting a credit are more stringent and many files deemed by the lending organizations to be unsafe enough are then refused.
Regarding the continuation of this fall in the mortgage rate, it is difficult to know what will happen as the European economic situation is uncertain.
In the end, over the whole of 2012, it is estimated that the mortgage loans granted by the banks should reach around 110 billion euros against 160 billion in 2011. The rates fall but the loans granted are not necessarily more numerous. This demonstrates the current difficulty encountered in the real estate sector, both for professionals and for individuals who are hesitant to make a real estate investment. They fear that their savings capacity will continue to decrease or they fear that their investment will be impacted by changes in taxation.