Falling real estate rates boost credit production
Fixed interest rates recorded further declines in September and reached a record high for 65 years. At the beginning of October, we recorded rates of 3.35% over 15 years and 3.55% over 20 years.
Production of home loans continued to increase in the third quarter of 2010. Among the credits granted, the share of first-time buyers is increasing. Renegotiations of credits, however, occupy a large place.
In terms of real estate purchasing power, the cost of credit is down 13% year- on-year. For example, we make a gain of € 10,000 for a loan of € 150,000 over 20 years. Nevertheless, the level of transactions, despite its growth, is still below its average level of activity in recent years.
Reform introduced by the PTZ + from January 2011
From 1 January 2011, the Zero Plus Rate Loan will come into force and replace the Zero Rate Loan in its previous formula as well as the Land Pass and the tax credit on real estate loan interest.
This assistance has been redesigned to provide a more targeted response to housing requests by zone. It will encourage new homes in tense cities and will benefit old homes in rural areas to maintain and revive town centers. With increased amounts, the new loan aims to increase the solvency of households.
Nevertheless, simulations carried out show that the loan is not as favorable for some households as the current device, according to the zones and the type of housing (new or old).
Evolution of market
Opinions of the actors or observers diverge on the trend that will follow the real estate market. Some think that the market is really revived and will continue to progress. The less optimistic think that the market will be affected by rising prices and lack of supply.
As far as we are concerned, we have made predictions resulting in 3 possibilities. In the first, if rates stay at the same level and prices rise by 5%, 8 buyers out of 100 would no longer be solvent.
In a second hypothesis, if rates increase by 100 basis points and prices by 5%, 27% of buyers would no longer be solvent.
In a third scenario, with interest rates rising by 150 basis points and prices rising by 5%, 36 buyers out of 100 would be destabilized. In all cases, only low rates maintain the good creditworthiness of buyers. A rise in rates would result in a rapid deterioration of their purchasing capacity.