While average interest rates on home loans were already at rock bottom in August, several brokers are observing further falls in September. After an intense first half of the year, banks are mobilizing all their resources to cope with the explosion in demand.
Rates at record lows
In August, the average mortgage rate stood at 1.05% (1.12% for new-build properties, 1.06% for existing properties). After falling by 20 points between June 2020 and April 2021, it reached its lowest level ever.
Since the start of the year, rates have fallen for all loan terms. The biggest fall (18 basis points) has been for 25-year mortgages. At present, average mortgage rates range from 0.87% for 15-year loans to 1.17% for 25-year loans.
In some regions, Artémis Courtage is even reporting rates of 0. 60% for repayment terms ranging from 16 to 20 years for those with an excellent track record and meeting the recommendations of the Haut Conseil de Stabilité Financière (HCSF), i.e. a debt-to-income ratio of less than 35%, including insurance, and a financial contribution.
Record production levels
Home loan production set a new record in the first six months of 2021, according to data published in August by the Banque de France. Banking institutions granted 110.7 billion euros in non-negotiated home loans during this period, 23 billion euros more than last year. After a slow start, with an 11% year-on-year decline over the January-February period, the market picked up again in the spring. In June alone, home loan production reached 21.3 billion euros, an all-time record.
This frenzy, due in particular to low interest rates, is having an impact on the sector's sales figures. 2021 could be a record year for the number of transactions, at 1.16 million. Banks are all the more inclined to grant loans as their margins increase, because despite low rates, they finance themselves at low cost. To keep pace, however, they are having to reorganize, putting all their available resources to work. In some networks, business credit specialists have been called in to meet demand, and fixed-term contracts have been signed to provide reinforcements.
As a result, a large number of mortgages have been granted in recent months. However, the Banque de France could break this trend by asking banks to be more demanding on certain criteria. Sanctions are already in place for banks that fail to comply with the HCSF's recommendations. From January 1, 2022, these recommendations will become a legally binding standard for banks.