Without a doubt, 2014 will remain an exceptional year for professionals and borrowers with a further decline in borrowing rates in October.
According to ATS brokerage, this new bearish movement is explained both by a sustained demand from borrowers at this time of year, but also by the general direction of the key rates. Indeed, as of October 21st, the 10-year OAT fell back below 1.30%, far below the usual monthly averages (between 2% and 3%) of recent years.
With interest rates of less than 2% up to 15 years of maturity, the mortgage market continued, against all odds, the decline it had begun at the end of 2013. According to the figures published by the credit observatory Housing / CSA, the average interest rates of mortgages granted to individuals fell to 2.59% in September 2014, against 2.68% in August. Never seen
for 70 years!
A win / win context
For borrowers, primo / secundo-buyers or investors, the period is conducive. By borrowing for a period of 10 years, at a fixed rate of about 1.70%, an investor will have every interest in avoiding to dip into his savings, placed in life insurance for example, which brings him about 3% per year currently via a risk-free euro fund.
In addition, given the level of interest rates, many borrowers, whose borrowing has been running for less than 10 years in particular, have an interest in renegotiating their mortgage. Many banks also agree to play the game since with the current level of borrowing rates, there is very little likelihood that a customer acquired through a renegotiation of real estate credit will change banks in the future to get better rate.
As highlighted by AVC Credit, CEO of the ACE group who believes that “banks remain dynamic in their willingness to finance, for two reasons. First of all because they have not yet fulfilled their goals, unlike the previous year. But especially because the mortgage is currently for banks an interesting product to offer, very good margin, given an extremely low refinancing rate. “
Portrait of the borrowers
According to ACE Group figures from October 2014, the average amount borrowed in Paris / DF Credit is € 297,000 compared to € 152,000 in the regions. The average loan term is 19 years and 9 months.
The Credits Exchange Company has unveiled a study whose results also highlight the disparities between buyers between Paris and DF Credit. Thus, if the age of the buyers varies between 35 and 39 years, their incomes are very different according to their place of residence. In Paris, the borrower receives an average of € 4,600 in income each month. His co-borrower € 3,960. A situation very different from that of the Seine-et-Marnais (2 100 and 1 540 €), or the inhabitants of Seine-Saint-Denis (2 800 and 1 720 €).
Disparities also exist regarding the amount of acquisitions, on average € 284,000 in the region. Sums that reach € 397,000 in Paris, € 335,000 in the Hauts-de-Seine, € 255,000 in Essonne, to fall to € 189,000 in Seine-et-Marne.