Evolution of mortgage loan rates
As every month, the observatory formed by the surety company Crédit Logement and the CSA institute published its report on mortgage loan rates. There is an upward trend in the new, and a downward trend in the old.
The financing costs less in December 2019 compared to November 2019, and yet we borrow over longer periods. More importantly, we borrowed more in December than in November, and the banks made more mortgages.
Average mortgage rates
3.09% in December 2019
According to the CSA / Crédit Logement observatory, the average level of the mortgage loan rate in December 2019 was 3.09%. These data do not take into account credit repurchases, nor bridging loans, nor transactions including the repurchase of credit is a new mortgage. In November 2019, the average rates were 3.08%, so we are facing a slight increase, however without significant consequence.
More than three-quarters of mortgage loans below 3.5%
78.6% of the home loans granted in December 2019 were granted at a nominal rate below 3.5%. Next comes the tranche of nominal rates between 3.5% and 4%, which represents 18% of the credits granted. 3.3% of home loans were between 4% and 4.5%, only 0.1% of the volume fell from 4.5% to 5.5% nominal rate. No loan has been granted above 5%.
3.14% loan rate for new real estate
In December 2019, the average nominal rate in new construction was 3.14%, compared to 3.04% in November. The rise in the interest rate is therefore significant: + 0.1%. This trend also follows the evolution of the price per square meter of new real estate, observed in November 2019.
3.06% nominal rate in the former
In December 2019, the average nominal rate for acquiring old real estate was 3.06%. It was 3.11% in November 2019, which therefore represents a drop in rates of around 0.5%. Again we note that the nominal rate drops as does the price per square meter in the old one.
The average duration of mortgage loans
17.2 years in December 2019
The CSA / home loan study shows that the average duration of repayment of mortgage loans granted in December 2019 will be 17.2 years or 206 months. In November 2019, the average duration of repayment of loans granted was 16.8 years. It will, therefore, take a few more months for first-time buyers to repay their loans.
A majority of reimbursement from 15 years to 25 years
The report shows that 31.2% of the real estate loans granted in December 2019, will be repaid over a period of between 15 years and 20 years. Next comes the 20 to 25-year bracket, which represents 29.2% of the credits granted. We borrow very little over a period of more than 30 years: 0.3% only on the volume of financing granted in December 2019.
The cost of real estate financing
Always cheaper
First time home buyers who obtained their financing in December 2019, will need 3.86 years of income to pay the cost of their loan. In November 2019, this duration was 3.89 years. We, therefore, observe an increase in the duration of reimbursements for a drop in the cost of these same reimbursements. However, this observation should be delayed, because it is only an average.
Reminder on home loan fees
It is reasonable to count an additional 8% on the price of an old property, and 5% on the price of new housing. This additional cost is explained by the presence of notary fees and bail or mortgage fees. Remember that the 2014 finance law allows departments to increase transfer taxes from 3.5% to 4.5%. We will probably have to wait until the end of the first quarter of 2014 to measure the impact of this likely increase in the cost of homeownership.
Banks have lent more
Borrowed amounts on the rise
This is good news, in December 2019 the average amount of home loans increased by + 23.3%, compared to December 2012. In November 2019, this amount also increased by + 19.1%, compared to November 2012. As the prices per square meter of new and old did not change significantly, it is reasonable to deduce that less contribution is necessary to become an owner. However, prospective buyers must keep in mind that each file is a unique case.
No more home loans
December 2019 was a good month for both banks and buyers. There were 15.9% more mortgage loans, compared to December 2012. In November 2019, there were 9.9% more mortgage loans granted, compared to November 2012. We are therefore really facing a positive development of the real estate financing market.