Real estate credit: becoming a home owner, a dream beyond the reach of the most modest


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For many months, interest rates on loans have risen, and with them the thread is tightening for the most modest French people. Why is borrowing to become a homeowner so complicated?

Via MoneyVox,

Like every quarter, the CSA Housing Credit Observatory has released a number of numbers that reveal the state of the mortgage market. With the second quarter of 2022 marked by an increase in real estate interest rates, it is not surprising that the most modest households have the most difficulty accessing loans. Is it still possible to get a loan with a limited budget? Clarify the numbers.

A delicate context for the most modest French people

The current context is not favorable for borrowers with a limited budget to purchase real estate. With the level of inflation of + 5.8% a year in June 2022, first and foremost the purchasing power of the French suffers from the general increase in prices. With a small extension, the most modest households are also the most affected and have more difficulty in making needs, putting money, and therefore being able to pay a monthly payment, high credit.

At the same time, the war in Ukraine increased the cost of some materials needed for construction. Wood, metal, PVC… the builders of new houses have no choice but to pass on this price increase to their own prices, with an average increase of +6.4% for the sector in the first half of 2022 To cope with this situation, three solutions are available to future owners: borrow more, bring more personal money, or cut corners in their purchase (smaller area, smaller room, location, etc.). Only the prices of existing housing remain a certain stability or more reasonable increase.

Also read: Real estate credit: change the method of calculating the wear rate, an emergency?

Fewer and fewer real estate loans are given to small budgets

According to Michel Mouillart, economist at the Crédit Logement CSA Observatory, “households with low contributions no longer have space in the market”. To reach such a conclusion, this expert is based on the level of contribution currently required to access the loan. Compared to the end of 2019, it is now necessary to use more money from personal savings: + 28.8% in less than 3 years. The profile of new borrowers thus changes to wealthier households, who now have enough savings that they can use and buy more expensive land.

In general, “the number of loans granted has weakened since the beginning of the year” according to the CSA Credit Housing Observatory for the second quarter of 2022, with a drop of -12.5%​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ in production that finally stopped. in June. But above all the most modest households suffer from this situation. Sometimes they find themselves completely excluded from accessing credit. It may be due to the excessively high debt ratio, which is amplified by the increase in interest rates of all durations. Even because the loan does not respect the wear rate, that is to say the highest rate at which financing can be provided, due to a lag between the increase in interest rates and the rate of ‘wear- ob.

In order to continue borrowing, more and more households are borrowing for a longer period of time. That is why 65% ​​of the loans were taken out in a period between 20 and 25 years, a record proportion, because it has not yet been reached. At the same time, home loans taken out for the shortest duration, less than 15 years, became more rare, with only 13.6% of new financing provided in these durations, which were also a historical figure.

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