Home loan: interest rates are now hovering below inflation

French banks slightly lowered in December the interest rates on real estate loans to individuals, the latter ending the year at a level close to their historic low and settling under inflation, according to a study published Thursday.

In December 2018, rates stood at 1.43%, at a level practically unchanged for six months, reports in a press release by the Credit Housing-CSA observatory. The first organization gathers as shareholders the main French banks, the second is a market research institute. This figure, which includes all loan durations, ends the year slightly down – it stood at 1.50% a year ago – and not far from its historic low of 2016, hardly more than 1.30%: it had touched it after years of relatively regular decline since the crisis of 2008. Especially, since the second half of the year, the average rate has been below inflation which, in turn, accelerated in 2018 to settle at 1.8%.

 

Gain purchasing power by going into debt

debt loans

Theoretically, this amounts to saying that it is possible to gain purchasing power by going into debt for a property purchase. Nevertheless, the observatory’s figures are understood to be gross and do not, for example, include loan insurance, systematically requested by the creditor body.

This situation is made possible by the conditions for financing and refinancing production, while the Best Bank has been carrying out an interventionist policy very favorable to credit for years, As well as by still keen competition between credit institutions, sums up the observatory. If rates seem to bottom, banks find other grounds to attract borrowers, while property prices continue to rise in France.

 

Loans over 18 years and 10 months on average

According to figures from the Observatory, the average duration of loans has increased by ten months this year and ended at 226 months (18 years and 10 months), an unprecedented level. dent, while banks have further tightened their demands. The conditions for granting credits have considerably relaxed with contribution rates that have never been so low since 1978, a movement that has lasted since 2012 and has accelerated from 2017, ensures the observatory.

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