Mortgage rates are currently at the lowest level ever recorded, according to the CSA Housing Credit Observatory. The crisis has no direct impact on the cost of borrowing today in France.
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One might be surprised at this period of strong economic tension, but no: those who can buy real estate at the moment have every interest in making an appointment with their banker. In the third quarter (July-September), the average mortgage rate was 1.05%, unchanged from the previous three months and significantly below inflation.
Mortgages benefit from the low level of interest rates in general. Households who want to buy a home or have it built today can say thank you to the European Central Bank (ECB), the guardian of the temple. The crisis is not yet behind us and the ECB is maintaining what is called an “accommodating” monetary policy. It keeps rates low to support economic activity. Large commercial banks can thus lend to individuals on attractive terms since the money they themselves borrow from the ECB is inexpensive. And then credit is the banker’s raison d’être, it is his main activity. He has every interest in seducing the customer.
The CSA Observatory notes an extension of the duration of loans. Today we are on average between 19 and 20 years old. Between the second and the third trimester, this period was extended by three months. Extending the repayment schedule compensates for the increase in purchase prices in real estate, because if rates are at a historically low level, apartment prices increase.
The real question is the sharp rise in real estate prices. The various confinements have pushed the French to change their habits and this continues to create tensions on the building, in addition to the increase in the cost of raw materials for construction. Either way, now is the time to invest before rates go up. The United States is giving signals in this direction. Buying more expensive housing with rising interest rates may soon become a reality.