Mortgage Rates: Decreases Finally Making a Comeback

Are we witnessing the end of the worst of the mortgage credit crisis? Despite a significant decrease in the number of loans granted (-43.5% year-on-year according to the Credit Housing Observatory), a glimmer of optimism is emerging for borrowers. Not only have mortgage rates stopped rising, but they are also starting to decline. Major banks, which had deserted the market due to the low profitability of mortgage loans, are returning with ambitious plans for 2024, aiming to win over new clients. Pierre Chapon, president of Pretto, a mortgage broker, highlights the end of the "We're not lending anymore" atmosphere, stating that all banks are now present in the market.

A national bank, absent from lending in recent months, announces a 0.2% decrease in its mortgage rates. The particularity of this decrease lies in its global nature, affecting the whole of France and all profiles, according to Maël Bernier of Meilleurtaux. This bank aims to align with the average market rate for 2024, Pierre Chapon specifies. Borrowers can expect rates between 4.1% and 4.4% over 20 years (excluding insurance and processing fees), and between 4.45% and 4.6% over 25 years. An additional discount of 0.2% is possible, as these rates are displayed before any negotiation. Singles earning at least 32,000 euros net per year and couples earning at least 42,000 euros per year are eligible.

Those under 35, particularly affected by the housing crisis, can also benefit from this decrease if they have an annual income of at least 25,000 euros, which is a little over 2,000 euros per month. However, Maël Bernier points out a caveat: to comply with the debt limit set at 35% by financial authorities, these young buyers, often lacking substantial savings and/or a high financial contribution, could be forced to sacrifice square meters or move away from the city center.

What about the outlook for 2024? Pierre Chapon mentions a relatively calm start to the year due to persistent demand issues, despite increased competition among banks. However, he does not rule out the possibility of "more frequent and aggressive rate cuts in spring 2024." Despite these welcome reductions for borrowers looking to realize their real estate projects, some caution is advised. Excessive waiting for even lower rates could, according to the founder of Pretto, create a sense of wait-and-see among buyers, potentially disadvantageous when competition becomes more intense with even lower rates and reduced negotiation margins.