Very popular before 2008, capped variable rate loans have now almost disappeared from the market. But in the face of the difficulties encountered by borrowers, some banks bring these products, at rates often lower than conventional loans, updated.
It is a product that had almost disappeared in France for individuals, but it is also close to making a comeback. Introduced in the 1980s, the variable rate loan was popular for a long time, before disappearing from 2008 and the financial crisis. subprime. With this crisis, there was then a huge amalgamation with the variable rates found in England or the United States, where they are pure variables, without protection for the loan, rewinds Mal Bernier, spokesman for the broker Meilleurtaux. In Portugal, for example, people borrowed 3% and suddenly found themselves at 6% or 7% and therefore could no longer pay their monthly payments. In France, there were a few French people affected, but these were epiphenomena.
Because in France, loans at variable rates were 99% capped, recalls Mal Bernier. Specifically, how did it work? The bank offers its client to take a loan, for example 2%. If it is cap 1, the rate can go up to 3% depending on the economic situation and 4% if it is a variable rate loan 2.. On the contrary, the rate can also fall in the same proportions. The interest rate is determined by a reference index to which is added a margin that is fixed over the entire duration of the loan. The most commonly used benchmark is the Euribor (Interbank offer rate in euros), the short-term money rate practiced between banks in the euro area. According to the fluctuations of this rate, the mortgage rate is revised.
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A solution to the usage rate?
Disappeared between 2008 and 2015 in favor of fixed rate mortgages, capped variable rates could now return. But if at the time this product was an opportunity for borrowers to see their credit rates fall in the event of an improvement, the current period seems to indicate that mortgage rates will not stop increasing in the months to come over.
Today, a French who would be offered a variable rate ceiling of 1, even if he borrows at 1.50%, remains hyperprofitable.
However, a credit rate of 1 head can now be a bulwark against inflation and rising interest rates. At worst, if he borrows 1.40% cap 1, the loan ends with a maximum rate of 2.40% when we know that rates will continue to rise, details Mal Bernier. Today, a French who would be offered a variable rate cap of 1, even if he borrows 1.50%, remains hyper-protected.
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If the banks, like the rest of the companies, are necessarily inactive in this summer period, the beginning of the school year could see the mortgage landscape evolve. At the moment, only two brands offer these products, with a rate between 1.20% and 1.30% in 20 years (against 1.85% on average in June for a classic 20-year loan). Today, it is a solution to enter the nails of the rhythm of use, confirms Mal Bernier. Especially since variable capped loans have their own interest rate, currently set at 2.45%, all durations combined.
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And this solution could become more and more interesting in the coming months. Indeed, the next increase on October 1 of the usury rate, the maximum rate beyond which a bank cannot lend, should not change the profound situation for the current oversights in mortgage loans, the two rates continue to grow Going through variable rate caps could therefore allow you to get around this, thanks to a lower nominal fee at the signing of the contract. It would not be surprising if the banks pull this type of product at the beginning of the school year, judge Mal Bernier. In any case, we have to educate, because today when we hear variable, we think of the crisis of 2008. But in the current period, these credits are of real interest.
The story is a little different on the part of Vousfinancer: According to the feedback we have from our partner banks, this is not current. We have a scale, which is currently in head 2, but it does not seem to be intended for the banks at the moment, explains Sandrine Allonier, spokesperson of the broker.
A final question arises: how can you reconcile the return of these variable rate capped loans? to the new standards in force from January 1, 2022, which require, for example, no more than 35% of the debt ratio? For Mal Bernier, the bankers have to take the maximum monthly payment for the debt report. So even if the credit is signed at 1.20%, we will verify that you remain below the debt of 35% if it reaches 2.20%.
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