Mortgage loan rates are expected to rise sharply from January 2023 (3.50% over 20 years) in line with the increase in breakdown limits – Savings Guide
Increase in breakdown limits from January 2023
Widely criticized for their weakness, especially by mortgage brokers, whose activity has fallen sharply, wear thresholds will mechanically increase next January 1. The increase should, again, be close to 50 points basis points. So the the usury threshold will increase to at least 3.55% for mortgages for 20 years and more (currently 3.05%) is this wear threshold. If this increase in the usury threshold will allow some files to get the green light from the bank, the relative value of credit will in fact break new absolute records. This expected increase in credit rates of around 14% from January far exceeds the average increase in income (estimated between 4 and 6%). The risk in real estate, whose prices have not yet decreased significantly in 2022, therefore increases significantly. The slowdown in the residential real estate market began in 2022, and should intensify in 2023.
Cost of a mortgage, rate of 3.50% for 25 years
Usury rate for mortgages
|Wear rate for individuals (applicable to Q4 2022) (1)|
|Maximum rate for a mortgage (over €75,000 borrowed)|
|Credit wear rate for a period of less than 10 years||3.03%|
|Credit wear rate with a duration of less than 20 years||3.03%|
|Credit wear rate for a period of 20 years and more||3.05%|
|Relay loan wear rate||3.40%|
|Variable rate credit wear rate||2.92%|
(1) source of rates: Banque de France
Current mortgage rates (average APR)
|Credit terms||High rate (15% intake)||Average rates (30% contribution)||Low rate (50% intake)|
|15 years old||2.78%||2.27%||2.15%|
|25 years||3.60%⚠️Rate above the wear and tear threshold of 3.05%||2.58%||2.55%|
|Updated on 01/12/2022|
. The insurance rate includes the borrower’s average insurance rate of 0.45%. Average market rates (with a 30% contribution), calculated on statements from mortgage brokers. Indicative data only.
ECB interest rate hike, market rate hike
ECB key rates have no direct impact on the rates banks offer to prospective borrowers. For any bank, the same euro can be lent up to 12 times. Therefore, there is no direct correlation between the main key rate of the ECB, recently raised to 2%, and the average rate of loans offered. On the other hand, the correlation with market interest rates is more established. These market rates, for their part, logically follow the tightening of the central bank’s monetary policy. The ECB announced last week that the rate hike is not over, far from it. More than one-third of the increase is still to come, thus underpinning the turnaround in the residential real estate market across Europe.
Real estate credit simulation © FranceTransactions.com/stock.adobe.com
Mortgage loan rates will therefore continue to rise as usury thresholds rise, but in fact, not faster, contrary to what many brokers would indirectly wish for by demanding a faster increase in thresholds. wear.