According to May figures published by the Banque de France, the fall in property rates is confirmed after an increase in April. This fall could signal a recovery in the sector.
No rate hike in sight
Rates on mortgages had risen during the confinement and are now falling: from 1.19% in March, they had risen to 1.31% in April and fell back to 1.25% in May.
For the Banque de France, this transitory rise is explained by the high percentage of renegotiations, which accounted for 50% of loans in April, compared with just 28% in March. While renegotiations enable the rate on the initial loan to be lowered, the rate obtained is still higher than the market average, and therefore higher than the rate on new loans.
At the same time as this increase in renegotiations, new loans were rare, as potential buyers preferred to put their projects on hold during the confinement period. New loan applications fell by 72% in the first three weeks of the lock-up.
Although the stabilization of interest rates seems to be a sign of recovery, the real estate sector remains cautious.
A mixed recovery
Despite these encouraging signs, real estate professionals remain wary. First of all, the proportion of renegotiations remains high, at around 32% in May, which may contribute to a slight bias in real rates. Secondly, the fear of massive layoffs in September is still very present, and is leading the sector to redouble its caution.
What's more, as a result of the recommendations of the French High Council for Financial Stability (HCSF) on the granting of home loans, banks are becoming increasingly demanding in terms of the profiles they select. Households must not only be solvent, but also have a significant downpayment - currently around 10%, compared with just 3% in 2019.
However, there are grounds for hope: mortgage applications have returned to pre-confinement levels. What's more, specialists think it unlikely that rates will rise on loans of less than 20 years: banks need to catch up with their targets, and mortgages are their product of choice.