What rates for real estate credit?
In January 2013, mortgage rates broke a new record low, averaging 3.16% over 20 years. Since then, contrary to forecasts which announced a slight increase, rates have lost on average 0.10 points and we can now obtain rates of 3.06% over the same period. What forecasts for the future?
Since March 2012, mortgage interest rates have fallen by 79 basis points. This rate cut is welcome for homeowners but also for the real estate market which is experiencing a fall in demand. The duration of home loans also fell sharply. Now, this duration has dropped below the symbolic bar of 200 months of reimbursement with an average of 199 months. As a reminder, we had not known such a low average since the end of 2005.
Despite these very favorable financing conditions, the volume of mortgages underwriting has not risen. We thus see a fall of -35.5% for the old market over the last 12 months compared to the previous 12 months. As for loans intended to finance the purchase of new real estate, they experienced a drop in production of -14% over the same period.
What average rates at the start of May 2013?
Today, future buyers who have a personal contribution and a stable situation can obtain a loan around 3.10% over 20 years. The best average rates obtained over 10 years are around 2.65%, when they are 2.90% over 15 years. A borrower who would like to take out a loan over 25 years can negotiate his home loan at 3.45%. These are average levels, some files get even better.
Banks have rebuilt their margins in recent months
Have significant cash to finance their clients’ projects. In addition, they have every interest in lowering their rate grids in order to attract new customers. The Fine Bank also kept its key rate at its lowest historical level of 0.75%. Although the Fine Bank has not announced another cut, it should theoretically decide to lower its key rate to an unprecedented low of 0.50% before the end of the year because there is no risk of inflation in the medium term in Europe. This Fine Bank monetarist policy should help stabilize rates in the coming months. Good news for future buyers.
Think about it: each bank adapts its rate grid according to borrower profiles and according to its specific business objectives. There can therefore be significant differences from one organization to another and that is the whole advantage of working with credit brokers such as Good Lenders advisers. Depending on your profile and your file, they will find for you the organization that offers the most advantageous loan offers, in terms of rates but also insurance, prepayments and guarantees.