Borrowing to finance an existing loan or for housing has never been so cheap. The economic situation is exceptional for the most solvent borrowers. In real estate, the average rate stood at 2.70% in July against 2.80% in June.
Falling rates: what consequences? Who are benefiting?
Logically, in credit consolidation, low interest rates mechanically make borrowers more solvent. The borrowing capacity becomes more increased, the amount of monthly payments could considerably decrease and the borrower will have more margins to request an amount dedicated to a new project.
This trend bearish on rates also benefits profiles borrowers most solvent, that is, those who already have their good property and want to make a new acquisition.
For young people, the situation is less clear. Despite the conditions for granting still flexible for this category of borrowers, the share of young people under 35 years continues to decline. According to the observatory, the under-35s represented nearly 53% of borrowers in 2009. Today, they are only 44%. The trend remains the same for modest households.
Furthermore, the current level of interest rates must be put into perspective. Admittedly, the credit market is historically attractive, but at the same time inflation gradually tends towards a very worrying level, automatically optimizing the real cost of credit in an invisible way.
Attractive rates: effects on the credit market
Thanks to the historically low level of interest rates, outstanding loans (real estate) increased further in June (3.2% compared to June 2013). This increase is mainly due to operations consolidation of credit real estate always important, but which begins to mark time.
Moreover, the production of new loans (all types of loans) remain quiet despite the terms of outstanding loan. Production even fell 0.9% in July over a year according to the observatory.
However, indications are that the production of new credit is expected to remain at least stable compared to 2013. In September, the institutions of credit will surely enjoy the rates down to even propose offers credit very competitive.
Thus, some observers are already forecasting strong activity from September, a period during which the lending institutions will soften their granting criteria to complete the commercial objectives.
