As might be expected, rates did not increase much, 76.6% of mortgage loans granted in November 2019 were below 3.5%. We note, however, that the gap is widening between the nominal rates granted for new and old real estate.
The cost of financing has logically increased slightly, although this has not slowed the market, as the number of signed loan contracts increases by 9.9% over one year. So it’s always a good time to buy, especially because the amount of intake required is decreasing.
Home mortgage rates up slightly in November 2019
Plus 0.4% on average
In October 2019, the average mortgage rate was 3.07%. In November 2019, it rose to 3.11%, which represents a slight increase of more than 0.4%.
Disparities between new and old
In October 2019, mortgage rates were almost identical for new and old, with an average of 3.08% and 3.07% respectively. In November 2019, the gap widened since households borrowed 3.04% for new, and 3.11% for old.
202 months average reimbursement
The home loans taken out in November 2019 were for an average term of 202 months or 16.8 years. It is interesting to note that compared to November 2012, the amount of home loans increased by 19.1%. 31.5% of the credits were granted over a period of 15 years to 20 years, 29.2% will be reimbursed from 20 years to 25 years, 17.6% will last from 25 years to 30 years. The share of mortgage loans repayable over 30 years represents only 0.4%. As for the short-term loan, that is to say over less than 15 years, it represents 21.2%.
These statistics are almost unchanged compared to October 2019.
3.89 years of revenue to pay the cost
On average, November 2019 borrowers will need 3.89 years of income to pay the cost of their mortgage. In October 2019, this figure was 3.79 years, the increase is most certainly explained by the slight variation in upward rates.
Details on these figures
Only real estate purchases were taken into account. In an effort to bring out exactly the state of the market, credit repurchases, bridging loans and mixed loans (new purchase + repurchase) were not taken into account.
More and more home loans granted
9.9% more home loan this year
In November 2019, it was granted a 9.9% more home loan, compared to November 2012. Again we are talking here only about real estate purchases, these figures, therefore, highlight the good health of the financing housing.
Reasons for success
It is quite simply the low real estate rates that explain this good behavior of the market. In 2012, 42.3% of mortgage loans were granted at less than 3.5%. In the second quarter of 2019, the average rose to 87.8%, twice the rate for all of 2012. It is important to remember that household wages have not increased, but their main concern still becomes the owner of their home.
Future mortgage loan rates
It makes sense that mortgage lending rates continue to begin their slow recovery. However, they should stabilize shortly, given the efforts of the European Central Bank to allow banks to refinance at a lower cost. It is, therefore, time to buy, especially since there is a slight drop in prices in old real estate.
How to become an owner in December 2019?
The survey carried out by the CSA / housing loan observatory shows that the average personal contribution decreased by 4.6% compared to November 2012. This is quite simply explained by the low rates.
If it is always advantageous to have a personal contribution, it is not always necessary. Some banks and credit companies will ask borrowers to pay the notary and guarantee fees themselves. This provision allows lenders to commit only to the value of the property acquired.
However, certain households whose professional situation is promising and the debt ratio very low can borrow without contribution.
The professional situation
The overall conditions remain unchanged: contract of employment in CDI, or in CDD / interim for two consecutive years without interruption, or activity of auto-entrepreneur with two years of positive assessments. However, we observe that banks and credit companies are much more attentive to the companies in which applicants work.
The borrower debt ratio
Whatever the professional situation of the borrowers, the banks will not exceed 33% of the future debt ratio. To calculate it, they refer to net taxable income, then take into account the current monthly payments of the applicants and add the monthly payments of the future home loan. The income/debt ratio should not exceed 33%. To determine if you are in the right bracket, use our debt ratio calculator.
Understanding the costs related to the mortgage
A household arriving alone in front of a bank or a credit company has every chance of mistaking the cost of its mortgage. The rates described above are the nominal rates, not the overall effective rates. The overall effective rate (TEG) takes into account all the expenses relating to the loan.
Borrower insurance, guarantee or mortgage, notary fees, brokerage fees, and others must be taken into account in the cost of a home loan. The role of a broker is to dissect loan proposals in order to better explain them to his clients. The broker is an Intermediary in Banking Operations and Payment Services (IOBSP), he does not work with a single establishment but with several of them.
It is, therefore, able to bring competition into play, to ultimately obtain the best conditions for its customers. Specifically, “better conditions” does not necessarily mean better TEG. There are many other things that come into play in a good home loan contract, including plans to resell or move borrowers in the future. If borrowing becomes easier thanks to low rates, it should not be forgotten that a mortgage loan can contain its pitfalls.