Publication-editorial – Buying real estate allows you to build assets and have a secure source of income in the case of a rental investment. The realization of such a project often requires a mortgage. This solution remains interesting even if an increase in average mortgage rates has been observed since the beginning of this year.
The increase in mortgage interest rates
Before we see its origin, we must return first to this significant increase in interest rates for mortgages. Since January 2022, the curve has gone steadily. In addition, the banks increased their rates again towards the beginning of May. However, it is always possible to find an advantageous mortgage offer with the help of a Cafpi mortgage broker. However, the average interest rate on home loans reached 1.5% for the first time in 20 years, an increase of 0.5 points since January.
“Such an increase in rates has been unheard of for many years,” said Pierre Chapon, president of Pretto, the leader of online mortgage lending in France. He also pointed out that the indicators collected by his company suggest that the increase will continue in the coming weeks. All loan profiles are affected by this upward trend. Currently, the median rates are:
- 1.37% over 15 years
- 1.47% over 20 years
- 1.63% over 25 years
What are the causes of this increase?
The main cause of this growth is the increase in interest rates on French government loans, also known as Obligations assimilables du Trésor or OAT. It is especially the 10-year OAT that has a direct impact on mortgage rates since it serves as a benchmark in the sector. At the beginning of May 2022, the 10-year OAT interest rates reached 1.5%, a level not seen since 2014.
Clearly, lending institutions, including banks, borrow at around 1.5%. Then, they also set their mortgage interest rates at around 1.5%. In addition, the inflation observed in recent months has contributed to the increase in loan rates for the purchase of real estate.
Is it the right time to get a mortgage?
This increase in rates makes it more difficult to access mortgages for those with fragile files. Banks have naturally become more demanding regarding the income of the borrowers and their solvency. Many of them are already forced to refuse more cases. Especially since the demands increase to anticipate new increases.
To carry out your real estate project without delay, take the time to compare credit offers. It is strongly recommended to use a real estate broker who will help you find the best rate in the market. He will evaluate your situation and study the feasibility of your project. A professional broker has the necessary skills to optimize your financing and negotiate the rate of your mortgage.
Content provided by Corine AINA
The editors of Boursier.com did not participate in the creation of this content.