Great news for households and the real estate industry: we are entering a period of negative real borrowing rates. Indeed, in a current context of very low fixed rates and rising inflation, French households have every interest in going into debt. Despite the few rate hikes in some banks observed in early June, the banks have not yet filled their credit share. A fortiori, certain banks do not hesitate to minimize their rate again and again. Now is the time to let the competition play.
A favorable period for investment
As mentioned earlier, the real rates become negative, the more the weeks pass. The real rate corresponds to the subtraction of the fixed rate announced by the bank from the current inflation rate.
To this end, the more inflation will increase, the more the real rate will be negative and this will therefore tend towards an enrichment of households. A negative interest rate phase that lasts over time is synonymous with very good financial operations for households turning to credit.
So far, the last cycle of negative rates in France took place between the end of the 1960s and 1975. Note that the nominal rates of the time were set at around 5%. Nevertheless, the sharp rise in inflation, propelling it to a rate of more than 10%, generated negative rates. The households that went into debt at that need moment have capitalized over the long term (around fifteen years). Today, the watchword is: going into debt. It’s time to invest to create real estate and use the credit leverage to finance your property.
No increase to fear
The Best Bank said last Thursday that it would keep key interest rates at current levels “at least until the end of summer 2019”, so there is no significant rise in interest rates. horizon. Economists are even observing further rate cuts, including over long borrowing terms. Lastly, average rates were recorded at 1.30% for a credit over 15 years, 1.50% over 20 years and 1.70% over 25 years. With negotiated floor rates at 0.80% over 15 years, 1.12% over 20 years and 1.35% over 25 years.
If you have not already done so, be aware that you have the possibility of renegotiating your credit taken out before 2015. The transaction may even often prove to be more advantageous for you since the rate spread is larger.
However, for loans contracted after the first rate cut in October 2016, the buyback operations will probably be less attractive since the gap with current rates remains small. In addition, you must have repaid at least one year of credit to amortize the costs associated with the transaction.
In any event, whatever the date of subscription of your loan, know that you can also renegotiate the insurance linked to the loan annually. Again with great savings. Need support to renegotiate your credit or loan insurance? Do not hesitate to contact us for more information.