This is a trend that has already been taking hold for several months but which is accelerating here: bank interest rates are rising. In April, according to the latest figures from the CSA Housing Credit Observatory, the average loan rate rose to 1.27%, against 1.18% a month earlier.
As a reminder, we were more around 1% last summer. Since the fall, the rules for allocating loans have been tightened up a lot: banks can no longer grant loans that exceed 35% of borrowers’ income, otherwise they can be sanctioned. But, above all, with inflation, they are much more careful than before on the files. They require more input. To be sure that you will be able to repay each month, banks are increasingly interested in where you buy, in relation to where you work. This is new in a context of rising fuel prices: they verify that you will be able to absorb the increase in transport costs!
There is also the war in Ukraine which worries investors. If the conflict escalates, it will further fuel inflation. Households will have even less margins, banks too because, in recent months, money has become more expensive. Commercial banks provide liquidity from central banks that lend to them but at higher levels and these increases, they pass them on to customers. In the United States, as we saw last week, the Fed increased its key rates by 0.5%. In Europe, for the moment, the central bank has not raised its rates but with galloping inflation at 7.5% in the euro zone, we are expecting an upcoming rise. Banks anticipate these increases.
The surge in rates is therefore likely to last and that is why, if you have a real estate project, do not postpone it too much, if you can. Even if we have to put things in perspective, rates are still well below inflation. Inflation is at 4.8% over the last 12 months. It is therefore always interesting to borrow.