Despite an “extremely rapid” rise in rates, real estate prices are not collapsing, assures the spokesperson for Best Rate on franceinfo. The financial services comparator published its 37th real estate observatory on July 11.
Rates for mortgages have risen sharply in a year and a half, so “extremely fast“, and yet, prices are not collapsing, assures franceinfo on Tuesday July 11 Maël Bernier, spokesperson for the comparator in financial services Best Rate, which publishes its 37th real estate observatory exclusively on franceinfo.
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franceinfo: How do you explain the increase in interest rates?
Mael Bernier : We have progressed for a year and a half. We went from a benchmark rate of around 1.20% to nearly 4%. It’s extremely fast, we’ve already seen rate increases, but just as fast, we’ve never seen that. This is linked to the resumption of inflation which was more significant with the war in Ukraine. She was record-breaking and extremely fast. What do we do when inflation rises? Interest rates are raised to slow down consumption.
The real estate market has slowed down sharply. Can we speak of a crisis?
It’s complicated because we have fewer requests, but on the other hand, there are also fewer sellers. Many French people have benefited from extremely low interest rates over the past four years, around 1% or even below, so they have no interest in returning to the market. So the pleasure purchase part, bigger surface, bigger garden, it’s over. So we have a very constrained, very restricted market, with far fewer transactions.
What is the difference in terms of borrowing?
In a year and a half to cover the increase in interest rates, wages would have had to increase by 25%, which is far from the case, or prices would have to fall by 25%, which is also not the case. So, if we take a couple earning 4,000 euros, the borrowing capacity has gone from more than 280,000 euros to less than 220,000 today. So they are forced to buy smaller, or to postpone their project.
Will the rise continue?
We are not at the end. We all expect that we will be at 4% at the start of the school year over the flagship period, that is to say 20 years. Today, we are more at 3.5%. Will 4% be a plateau? This is possible because inflation is slowing, the European Central Bank is also slowing its hikes. We will have to monitor what is happening.
Is the increase the same everywhere in France?
It is very different depending on the city. We observe that there are medium-sized towns where prices continue to rise, such as Le Mans. Apartments are not going to sell very well, while houses with exteriors are selling very well and it depends on the cities. Paris is slowing down, like Bordeaux and Lyon, but they are very high cities. But we are not in a price collapse. For this, a strong deficit between supply and demand is needed.
Are these record highs?
No, a very long time ago, we had rates around 12%, but there was inflation that went with it and wages that went with it. Rates at 4%, we experienced that in 2012. The problem is that we have to change dogma. When we had free money for 4-5 years, that you could borrow at 1% or even less, and that you are told that now it is 4%, it is sure that it is a little traumatic for those who did not have time to borrow before.