Current inflation affects many items in our daily lives. And mortgages are not spared. The latter could indeed reach the rate of 2% for 20 years by the end of 2022. What explains this increase in mortgage rates for borrowers and what are the tips for limiting its impact? Let’s look at all these aspects in detail.
Why an increase in rates for borrowers?
Ambient inflation is evident in sectors as varied as energy, food, school supplies and mortgages, to name but a few examples. Faced with this situation, the journalists of the magazine Capital approached real estate experts to learn more about the rise in mortgage rates. Indeed, from the end of 2022, the borrowing rates for a mortgage may reach 2% for a borrowing period of 20 years, as authorized by the Banque de France. And this rate could even be exceeded! This increase in credit rates is explained by the fact that money is becoming more and more expensive for banks, and this increase continues to grow. Thus, banks are forced to pass on this cost to home loans by increasing the rate of home loans granted to borrowers.
Most mortgage rates are currently around a fixed rate of 1.70% for a loan period of 20 years. But these interest rates will not remain stable and will on the contrary experience an increase which will make them reach a minimum rate of 2% for 20 years. This new inflation will therefore in turn have an adverse impact on the purchasing power of French people who wish to take out a mortgage. But this rise in borrowing rates is not necessarily inevitable since certain negotiation methods make it possible to limit this impact. Here are some tips that will allow you to divert this increase in mortgage rates and preserve your purchasing power.
– The first rule to follow is to ensure that you prepare your file carefully before going to your bank to apply for a mortgage. It is important to present a qualitative real estate investment project, but also to mention the amount of a contribution or the presence of residual savings that will reassure the bank about your personal finances.
– Another aspect that is of great importance in the context of a mortgage is borrower insurance. It should be chosen with the greatest care, again trying to obtain an advantageous rate with favorable general conditions. First-time borrowers are then favored. The better your file will be prepared upstream, the more the bank will be inclined to satisfy you and grant you a discount on the rate of your credit.
– Finally, in case of refusal, do not hesitate to reduce the amount of your mortgage by using the trick which aims to take out two loans but for different amounts and durations. You can thus borrow the global sum of your real estate acquisition but through two different loans, such as borrowing 150,000 euros over 15 years and 250,000 euros over 25 years.