Interest rates stabilise around 4%
New borrowers and those whose mortgage applications have been rejected in recent months now have a better chance of obtaining an offer. Various factors are coming together to help them more easily meet the maximum debt-to-income ratio of 35%. First, interest rates are stabilising, even decreasing: they are around 4% for 15 years, 4.2% for 20 years, and 4.5% for 25 years. Additionally, major financial institutions seem to be returning to this market after exiting due to the increase in rates over the past two years. Finally, the government has taken measures to support households with projects.
Some relaxations
First decision, banks will be allowed to lend beyond the maximum borrowing period of 25 years. In the case of renovations representing at least 10% of the total transaction amount, they will have the right to offer loans up to 27 years. This measure will slightly lighten the monthly payments. The flip side is that the cost of credit will increase, as interest will continue to accrue for an additional 24 months. The second adjustment concerns homeowners who sell with the intention of buying. They will be able to calculate the maximum debt ratio (35%) by excluding the interest on the bridge loan, provided that it does not exceed 80% of the value of the property sold. The third relaxation concerns cases that do not comply with lending rules but whose future buyers are still solvent. Banks can deviate from these criteria in 20% of cases. This previously appreciated limit on a monthly basis will now be studied over three months, giving them more flexibility.
Note: in light of these new provisions, Bercy (French Ministry of the Economy and Finance) and financial institutions have agreed to open a reassessment session (in February, likely) for narrowly rejected applications. Concerned individuals will need to make a request.