Fixed. Credit rate in June: Is there still time to buy?

After April and May which saw sharp rate hikes, the upward trend continued into June. The current situation weighs both on banks whose margins have shrunk dramatically and on many borrowers whose profiles exceed usury rates.

Credit rates are all on the rise

In June, according to mortgage broker Vousfinancer, credit rate increases range from 0.10 to 0.40%. In total, since the beginning of 2022, the average rate increases were 0.50%, but reached 0.75% in some banks, which represents a monthly repayment increase of 70 euros for a loan of 200 thousand euros. Over the course of 20 years.

Same estimate for Brito mortgage broker who sparked a 0.10% increase in June and an average increase of 0.60% since the beginning of the year.

1.55% or 1.60% over an average of 20 years, depending on the broker

For Vousfinancer, prices in June averaged 1.35% over 15 years, 1.55% over 20 years, and 1.75% over 25 years. “But more and more banks are now posting rates above 2% over 20 years, rates that have not been published since 2017, the broker notes. However, with a good profile, it is always possible to borrow at 1% over 15 years. , 1.15% over 20 years, and 1.30% over 25 years. »

In Brito terms, average rates are estimated at 1.46% over 15 years, 1.60% over 20 years, and 1.72% over 25 years. For the best profiles, quotes are 1.29% over 15 years, 1.42% over 20 years, and 1.54% over 25 years.

Lower rates of usury, brake for more borrowers

The usury rate is the limit set by the Banque de France after which the institution is prohibited from lending money. A loan is considered “interest-based” when it is granted at a total effective rate or annual interest rate (including the cost of the credit itself, as well as the borrower’s insurance cost, management fees, etc.) which exceeds the time of its grant, by more than one third of the average effective interest rate applied during the previous quarter by banks (according to the term of the loan).

This method of calculation, which is not followed, poses a problem. The usury rates currently in effect, since April 1, have been calculated based on the rates actually granted in January, February and March 2022, so for credits sometimes required at the end of 2021 simultaneously, you can still borrow large amounts. Good profile at less than 1% over 20 years. Thus, the recent and very sharp rise in prices was not taken into account, or very little was taken into account.

“In a phase of price hikes like the one we are currently experiencing, erosion rates are now fully correlated with market realities. As evidence, over the course of 20 years and more (the most common credit period), the rate of depreciation has fallen by 20 points in one year, decreasing from 2.60% to 2.40%, despite a 35-point increase in credit rates (….) So we understand that many borrowers today are actually being left out of credit,” analyzes Julie Baschett, CEO of Vousfinancer.

And not just the most fragile, with a health problem or age. “People who could have borrowed without problems six months ago in theory can no longer do so,” she notes.

Expected more price hikes?

In the current environment, with government borrowing rates at 1.6%, back to their level in 2014 when lending rates were over 3%, and with inflation at 5.2% in May, as much as in 1985, it is likely that higher rates will continue in the coming weeks. To Vousfinancer.

“Especially since the European Central Bank (ECB) should change its accommodative policy to curb inflation from July, which should affect interest rates as well as loan production,” the broker notes.