Paris, July 5, 2018 – In July, the rate scales hardly changed, after the cuts practiced in June … But the banks again grant very low rates to attract the best customers, back on the market since mid-May. So it is now possible to borrow at less than 1% over 15 years, negative real rates with regard to inflation at 2.1%! In this context, Lite lender company notes a real recovery in loan demand in June, returning to its level in June 2017, but with half the loan renegotiations, confirming the resumption of real estate transactions and the desire of the French for Pierre.
Rates posted overall stable, but big discounts and rates at less than 1% over 15 years!
In July, banks generally left their rates stable, at the same level as in June, the month in which many of them had lowered them. However, in a context of renewed demand for credit and revitalization of the real estate market, banks are granting large rate reductions to the best profiles, or to young people, with a return to rates close to the lowest historic levels of the 2016 year! “In a context of return of buyers since mid-May, the banks are competing strongly to attract the best profiles and young people, by offering them very attractive rates! Several of them have launched in recent days special operations valid all summer long with “broken” rates… We are again seeing loans granted at less than 1% over 15 years and less than 1.3% over 20 years ! The market is currently clearly in a recovery phase, boosted by rates close to the lowest historic levels at the end of 2016… ” analyzes Sandrine Allonier, spokesperson for Lite lender company .
Average rates are currently 1.30% over 15 years, 1.50% over 20 years and 1.70% over 25 years, but with negotiated floor rates at 0.68% over 15 years, 1% over 20 years and 1.35% over 25 years for the best profiles.
Examples of profiles currently benefiting from rates of less than 1% over 15 years in Lite lender company agencies:
- 0.68% over 15 years in Nantes for a couple of first-time buyers of 35 years with $ 5,500 / month of income and 60% contribution
- 0.89% over 15 years for a CSP + couple with more than $ 150,000 in annual income and a lot of savings in Paris (14 th )
- 0.90% over 15 years to finance a rental investment for two 55-year-old executives with $ 85,000 in income and $ 250,000 in savings in Mayenne
- 0.95% over 15 years for a single person with income above $ 30,000 / year or $ 50,000 for a couple in Rhône-Alpes, but also in Orsay
- 0.96% over 15 years for a borrower with more than $ 60,000 in income and less than 35 years via an online bank
- 0.98% over 15 years in Lorient for a couple with $ 3,000 / month of income
- 0.99% over 15 years for a couple of seniors with $ 6,500 / month of income and only $ 5,000 contribution to Saint-Etienne
But also 1% over 20 years for first-time buyers of 32 years with $ 65,000 / year of income in Laval!
Negative real interest rates, but not an immediate impact for the borrower…
While inflation is currently at 2.1% in June, against 1.4% again in January, most loans are currently granted at real interest rates (nominal rates offered by banks “minus” the rate inflation) negative! Admittedly, this is theoretically the case, but for the borrower, negative real interest rates have less impact than they have for an investor who sees the theoretical purchasing power of his savings decrease when consumer prices are increasing faster than the return on savings …
In the case of a negative real rate credit, it is not because consumer prices increase that the weight of the fixed monthly payment for the borrower decreases… It just means that the burden of repayment of the loan will weigh relatively less than other consumer spending rising in the borrower’s budget … What really matters to him is in fact the evolution of wages … For example, the minimum wage increased by 1.24% only in 2018, a figure below inflation … “Beyond the evolution of inflation, it is the evolution of wages that must be observed to assess whether the burden of repayment of a credit falls for borrowers … It is only when wages increase that the monthly payment of the credit, which is fixed, weighs relatively less each month … But as inflation is taken into account in the revaluation of the minimum wage and certain wage negotiations, there will indeed be a positive effect but i ndirect, for the borrower, provided that inflation remains at this level in the coming years … “explains Sandrine Allonier.
The return of the credit request to the same level as in June 2017!
While the 1 st quarter of 2018 was marked by a wait-and-see attitude by buyers with a demand for loans down by 20%, in recent weeks, the real estate market has regained unprecedented dynamism in 2018, with a level of demand equivalent to June 2017 …
“Since mid-May, we have observed a return of buyers, particularly in connection with the level of very attractive rates … In June, the number of loan requests returned to the same level as in June 2017, with 2.5 times fewer renegotiations, which testifies to the resumption of transactions and the dynamism of the real estate market in this summer period. In this context, the banks do not want to miss this window of fire which should enable them to progress rapidly in their objectives of production of credits, after a more complicated start to the year… Hence a particularly attractive rate policy which should be to continue again at the start of the school year, a key period for banks because it has traditionally been rich in real estate transactions ” concludes Jerome Robin, CEO of Lite lender company