Do you have a project in progress? Its financing will inevitably be at the center of your concerns! For your first real estate purchase, the acquisition of a second home or even a mortgage loan repurchase, the financing conditions can change completely. How is a real estate loan calculated in 2023? How can you be sure to find the best rate? Investing without contribution, impossible? Climb helps you understand real estate loans!
Small benchmark of real estate credit
How useful is a home loan in 2023? By definition, real estate credit concerns the purchase of a building for residential (or professional and residential) use or land intended for its construction. There is different types of loans, which are designed to meet the expectations of borrowers based on their situation, their standard of living and the project:
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The French are big consumers of credit. According to a study by the French Association of Financial Companies (ASF), cars and motorcycles are the main goods acquired through a consumer loan, while 90% of the credits obtained are used to finance a consumption project durable.
On the other hand, if 2017 saw an upsurge in loan holding rates by French households, 2018 saw this rate stabilize at 47.8%. In 2019, it fell to 47.4%. In 2020, it was 31.4%.
A true institution in France, real estate credit has almost become a necessary step for anyone looking to become an owner. It is with this in mind that the Crédit Immobilier de France group was created. In all cases, the principle is the same: the borrower takes out, on file, a real estate loan with his banking establishment in order to finance the construction or acquisition of his home. The contract, the terms of obtaining credit, reimbursement and insurance are governed by a regulation very strict.
The duration is variable, and is often subject to a negotiation between the lending institution and the borrower. Thus, the average duration of a loan is 20 to 25 years but can sometimes go up to 30 or 35 years. Real estate loans are not capped: there is no maximum amount. However, the loan amount is generally proportional to the household's resources.
Evolution of real estate loan rates in 2023: How to get the best mortgage rate?
Who says real estate credit says rate. Capped by the Bank of France, real estate loan rates depend on the lending institution. It is for this reason that individuals looking to take out a home loan are strongly encouraged to compare the different borrowing rates practiced by banks and credit organizations. The interest rate is set by the lender. It can be fixed for the entire duration of the loan or variable, depending on its duration or an index (Euribor 3 months or 1 year, for example). Here are the latest figures as of December 2023:
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These real estate loan rates for 2022are excluding borrower insurance. Indeed, when you take out a real estate loan, the establishment or lending organization may require insurance (but cannot impose the choice of insurer) to compensate for the risks linked to death and disability. The calculation of the interest rate depends on three main parameters:
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The duration of the loan: which designates the repayment period granted to the borrower. A long-term loan inevitably increases the interest rate.
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The borrower's profile: granting a real estate loan constitutes a risk for the lending institution, which must ensure repayment of the capital it lends. The higher the risk (low or decreasing income, debt, low personal contribution, etc.), the higher the interest rate offered will be.
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The rate of the OAT (for equivalent Treasury Bond), particularly that of the 10-year OAT, is currently very low.
Which rate to choose? Fixed or variable?The majority of borrowers opt for the fixed rate loan, a guarantee of security. The variable rate represents a financial bet. It is best recommended for borrowers whose income is stable and/or increases regularly (civil servants, young entrepreneurs and rental investors). The important thing for the borrower is to maintain control of the risk, in all circumstances.
Borrowing capacity simulation: The borrowing capacity of an individual corresponds to the maximum amount that he or she would be allowed to borrow from a banking establishment. It depends on the following criteria:
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his age,
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his department of residence,
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his annual income,
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its other current credits/borrowings,
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the type of property targeted (new, old, building land),
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the duration of the loan,
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the borrowing rate.
Many tools for simulating borrowing capacity for a real estate loan are available free of charge online.
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