Paris, December 3 – Thirty banks have to date lowered their mortgage rates, which have thus returned to their January 2015 level. The rate hike observed during the summer has therefore been completely erased, and further declines could even be applied at the start of 2016, particularly in connection with the level of government borrowing rates and the ambitious loan production targets set by the banks.
Further rate cuts in December
To date, around thirty banks have lowered their mortgage rates thus canceling the increases observed during the summer. The last decreases observed at the beginning of December range from 0.05% to 0.20% depending on the profiles and the duration of loans. Some banks have thus applied this month to steeper reductions on the “VIP” profiles (more than $ 100,000) or on short terms (less than 20 years) also popular with “high-end” customers.
“If the banks are not more selective at the end of the year, some are clearly positioning themselves in order to win over targeted customers by offering very attractive rates over short terms – less than 2% over 15 years – and for tranches highest income. The other borrowers also benefit from lower rates, but to a lesser extent… ” analyzes Sandrine Allonier, responsible for bank relations at Good Finance.
If we can borrow on average at 2.20% over 15 years, 2.55% over 20 years and 3% over 25 years, the spreads remain high depending on the profiles and the banks, with, moreover, possibilities of discounts which remain important depending on the attractiveness of the client for the bank.
A sharp drop in requests for loan renegotiations at the end of the year
If the renegotiations of loans reached up to 50% of the requests before the summer, they do not represent more than 15% of the files deposited on the site Good Finance. “Since September, requests for renegotiations have been falling sharply, on the one hand because most of the credits that could be renegotiated were in the first half, and on the other hand because the credits granted since the beginning 2014 benefited from already very attractive rates which did not make such an opportune operation ” analyzes Sandrine Allonier.
Over the whole of 2015, renegotiations should therefore represent 35% of the total credit production of Good Finance, which will exceed 1.5 billion USD in financed credits.
Rates that could fall slightly further in 2016
If rates have dropped since the fall, the movement could continue in 2016 for several reasons:
- Banks set targets for credit production equivalent to 2015
- Government borrowing rates fell to 0.80% from 1.34% in June 2015
- The Cream Bank will continue its accommodative policy in 2016, as will the FED which confirmed it, even if a rate hike could occur before the end of the year.
“2016 should therefore be a very good year to become a homeowner, thanks to the very low level of interest rates, but also thanks to the widening of the zero-rate loan which contribute to the return of first-time buyers on the market. However, a real recovery in the real estate market will only be possible with a sustainable return to growth and jobs, essential to restore confidence in the future for the most fragile households ” concludes Jérôme Robin, president and founder of Good Finance.
Good Finance’s strategy is based on meeting with a single interlocutor expert in financing, transparency (assembly of the financial file carried out with the client), and the guarantee of quickly finding (less than a week) the global solution the most adequate (loan insurance, rates, guarantees, monthly payments, terms, cost of credit, administration fees, banking partners). Good Finance also offers solutions for professional loans and the repurchase of credits.