After 2018, a record year, the feeling is the same for 2019 in terms of mortgage. Only? Excitement or anxiety?
With regard to the volumes of credits produced, 2018 marked the return to normal of flows linked to renegotiations, since the players and the Banque de France reduced the proportion to 14% against more than 50% at the start of 2017. Despite this, the year will undoubtedly show a volume of home loans of 203 billion dollars (including 170 billion of new home loans), bringing the total outstanding amount of loans to households linked to residential housing to more than 1,000 billion dollars. Record! This trend even manages to worry French, but also international, regulatory authorities. These statistics are linked to the conjunction of several favorable elements which may continue over the coming months…. Or not.
Lowest policy rates
First, a particularly low interest rate level. And unless there is a major international geopolitical event, there is no fear of seeing interest rates “flare up”. The Good Lenders Bank has also declared that it will remain accommodative throughout 2019, even letting a further boost to banks in the euro area. But that does not mean that banks will not make rate management their credit distribution strategy.
The market boosted by major projects
Then, household morale in 2018 was very good. Intentions to invest in stone remain high, and confidence in the economy is good. Social movements at the end of the year, depending on the development of the management of “yellow vests”, could change this index, but the market remains healthy in terms of demand. And investments in certain cities continue, which in anticipation of the Olympic Games, which with regard to the establishment of LGV lines, which still according to local territorial developments.
What credit conditions for 2019?
The direct consequence is found in constantly inflationary price levels in these markets, which force the banks to extend the credit periods to compensate for the loss of real estate purchasing power. Between January 2018 and January 2019, the initial average duration of loans increased by 6 months to almost 19 years. Moreover, the “20 years” has been replaced by the 25 years, even 30 years to accompany first-time buyers.
Increasingly complex personal situations
Rising market prices, however, remain a major issue for lenders because their level of collateral is more likely to be jeopardized if prices adjust or the flow of transactions seizes up. This is reflected in the conditions and criteria for granting banks, which must take account of increasingly complex personal or financial situations to understand, and this over increasingly long repayment periods. But it is undoubtedly on this single register that the establishments will be able to have a real hold, with the risk of excluding for a few months certain profiles of candidates for accession. More than ever, the preparation of your project is essential, in particular by using a credit broker.
In summary, we are faced with a possible tilting situation, but where all the indicators are green: rate level, confidence, desire to buy, rising prices but still reasonable in comparison with the big nations.