Real estate rates: they stabilize, the average loan duration decreasesUncategorized
For the second consecutive month, the average mortgage loan rate stood at 1.13% in February 2020 according to the Housing Credit Observatory / CSA. At the same time, the average duration passes the 19-year mark.
In calm water since October
Since last October, the mortgage rate has stabilized between 1.12 and 1.13% according to the monthly publications of the Housing Credit Observatory / CSA. The February report even marks for the first time since the end of 2018 a figure unchanged from month to month. At the time, the rate had varied between 1.41 and 1.43% for an entire semester, before falling 0.30 points to current levels. Are we on the floor? Or at a plateau before another dizzying fall which will lead us below the symbolic threshold of 1% at the end of the year? The Xerfi institute expects rather stagnation until 2021.
An average duration again greater than 19 years
However, the figures for February must be observed in the light of the recommendations of the High Council for Financial Stability at the end of last year. As a reminder, the HCSF reminded lending institutions to avoid mortgage loans over 25 years and those with a debt ratio above 33% . Consequence: a decrease in the average duration – which rebounded to 19 years and a quarter in February (+4 months) – and a decline in the share of borrowers with the least personal contribution, which corresponds to the youngest households or the less affluent.
Almost one in two home loans between 20 and 25 years old
These mechanisms should have led to a drop in the average rate, they in fact masked a slight increase of 0.06 point over 15 years (0.93%), 0.04 point over 20 years (1.08%) and 0, 03 point over 25 years (1.33%) compared to last November. In addition, the share of borrowings between 20 and 25 years is more than ever in the majority since it approaches 50% (48.2%), benefiting in particular from the “postponement” of contracts of more than 25 years fell to 1% against 1.7% in 2019.
Production down, personal intake up
The instructions had two other notable consequences. First, the slowdown in mortgage activity: the number of loans granted fell by 13% between December and February compared to the same period a year before, and the amount of production fell at the same time by 4 %. Then the increase in the level of personal contribution: + 11.1% since the start of the year, whereas it had finished 2019 at -5.5% over twelve months.