Real estate loan: should you be afraid of rising rates, is it the right time to buy?

After years of stagnation at extremely low levels, rates are rising steadily. A fair return to normal?

This is recognized by all mortgage professionals: rates charged in recent years have been at “abnormally” low levels. This has resulted in many buyers being attracted… but also in rising house prices because of the cheap money. Over the past few weeks, we have seen an upward trend in rates.

And, according to Mael Bernier, director of communications for the Meilleurtaux website, “there really is a rise in rates and forever.” Consequence: “The bullish weights since the end of March prove that borrowers will face a more difficult situation than they have been accustomed to for several months.” Should we be concerned about this? Midi Libre sums up.

1. What are the upper levels?

“All profiles and all durations are taken into account, from an average file to an excellent profile,” notes one of Meilleurtaux. “The rates are rising faster than expected, and the trend is confirmed day by day. Between +0.15% and +0.45%.” Thus, the average rates are around 1.20% for 15 years, 1.35% for 20 years and 1.50% for 25 years at the beginning of April.

But “it’s not entirely out of the question that we’ll get other bullish scales that will further push the numbers seen at the start of the month.” In the region, the Meilleurtaux groups noted that rates are around 1.01% for fifteen years. Against 0.89% in the southwest. And even 0.75% in the Greater Lyon area.

2. Should we be concerned?

Despite growth, rates remain low. “That was to be expected. Rates were so low that they could only go up,” insists Julien Gros of Crédit2L, a Montpellier firm that specializes in loan renegotiations. He adds: “Even if the raise may seem cruel, the rates are still low, reasonable.”

Added to this is a reminder of the High Council for Financial Stability (HCSF), which has imposed an effort rate on borrowers limited to 35% of their resources. Previously, it was set at 33% of income. “Potentially today we can find a borrower who cannot be financed by a bank,” admits Sebastien Baggio, director of the Banque Populaire du Sud (BPS) network. “However, this remains a rarity.

But above all, we have probably never had to create a custom project, because our mission is to find solutions for our customers.” and attractive bases for the client. Finally, the head of the BPS recalls this essential element: “you should always compare the value of money with inflation.” Result: “1.5% over 10 years compared to 3% to 5% inflation, this is still a good deal for the borrower.”

3. Is the increase temporary?

Jean-Jacques Lafont, an expert at Nimes-based Patrimoine Invest, believes that “the increase in rates is structural in nature, it will not be there for only a few months.” He insists, “We have to live with raising rates regularly in our daily lives.”

It also reminds us that real estate is a story of cycles. “Several years ago we borrowed at 4.5%, even at 6%. So, being, as it is today, below 2%, it remains very attractive and interesting to borrow.” He insists on the fact of “inciting competition between banks.” And for this, “it is best to rely on brokers who negotiate with bankers for attractive rates. They are the ones who have the broadest view of the market.” Because “all banking institutions do not necessarily want to give credit.”

“It’s time to buy”

The president of the Syneos network, a national real estate group headquartered in Saint-Jean-de-Veda, Hérault, Hélène Freiss believes that “now is the time to buy.” Indeed, she adds, “rates should continue to rise to reach 2-2.5% by the end of the year, so it makes sense to take advantage of rates that are still quite low.” Moreover, she continues, that “rising rates can lead to lower prices.” According to reviews of network agencies, “it seems that the candidates for the purchase are now showing some sort of wait-and-see attitude.”

4. What are “good” rates?

The Meilleurtaux teams estimated that, given the observation of different levels of rates practiced, what rates were considered good throughout the Mediterranean. For a period of 7 years, the rate “excellent but rare” will be 0.69%. Otherwise, “very good” would be 1.06% and “good” would be 1.16%. For 10 years, it is, respectively, 0.75%, 1.07% and 1.2%. Over 15 years old: 1.1%, 1.3% and 1.48%. Over 20 years: 1.23%, 1.43% and 1.55%. Finally, over 25 years (maximum duration): 1.35%, 1.57% and 1.65%. Note that most of these rates have been on the rise in recent weeks.