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Mortgage Loan: Towards an average rate of 1.70% by the end of the year

Calm fell on the mortgage market. Banks continue to offer very low borrowing rates. Last March, all loan durations combined, the average rate stood at 1.49% (excluding insurance and cost of collateral) , says the Observatory of Housing Credit / DSS this Tuesday, April 17th.

The real estate market is reaching new heights .

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“The slight drop in interest rates since August supports demand, but is no longer sufficient to offset the rise in real estate prices, alert the latest barometer of DSS Housing Loan Corporation”. Rates are falling since last summer.

This rate has slightly increased since last February (1.47%). However, it has remained stable since the beginning of the year, notes Banan . In detail, the fixed rate is 1.29% for loans over 15 years. It reaches 1.46% for loans over 20 years. The fixed rate rises to 1.73% for loans over 25 years. ” Since the end of the summer of 2017, interest rates have fallen slowly, by around 1 basis point every month, ” says the Crédit Logement Observatory.

In March 2018, ” they have regained their level of the end of winter 2017, despite the lengthening of the duration of credits granted, ” says the Observatory. These favorable rates reflect, in particular, competition between banks . On the other hand, 10-year Treasury Bonds ( OATs ) posted a lower rate in March than the previous year at the same time. Immoweek also discusses the abundance of liquidity and refinancing conditions of banks.

The risk of exclusion is lurking for poor households

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For 2018, the outlook is good. The rise in credit rates should remain slow and gradual until 2020. The Housing Loan Corporation / DSS supports its conclusions on the pace of inflation, but also on the ECB’s very accommodating policy . Mortgage rates ” are expected to grow only moderately in 2018 and end the year between 1.65% and 1.70% at most, ” says the Observatory.

If rates do not soar, the credit market is starting to run out of steam. ” The deterioration in solvency due to the rise in prices observed over the past six months was four times higher than what the only rate cut could have absorbed, ” notes the Observatory. Real estate prices should continue to rise . This trend could eventually exclude the most modest households from homeownership.

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