Average loan rates at highest level since 2009

In the fourth quarter of 2023, the Credit Logement/CSA Observatory shows that the average real estate loan rate in the competitive sector was 4.20%. This level was reached following a significant increase that began in the spring of 2022, and since then, it has risen by 3.20% for the first time in December 2023, to equal the rate recorded in 2009.

This is a first since 2009: the average mortgage rate has never exceeded the 4% mark since that year. In December 2023, it again reached 4.2%. After two years of steady progress, the average lending rate has returned to its spring 2009 level. The hike of 189 basis points in 2023, however, is significantly lower than the interest rate, which is set at 306 basis points. Loans over 20 years, according to data from a CSA/Credit Lodging Observatory study published on Thursday, January 18, 2024. Throughout 2023, the average rate reached 3,59%.

The source clarifies, however, that “If progress was brisk through October, average +18 basis points per month -bps”The trend is currently towards a rather horizontal curve “+9 bps in November and +2 bps in December”.

On higher rates of origin, inflation and the ECB

As an explanation for this spectacular increase, reference is made to the high rates of the European Central Bank (ECB) which acted in line with equally high inflation. Banks are encouraged to pass this increase on to their customers, at the risk of generating loss-making transactions.

“ For the first time since July 2022, the ECB’s main refinancing rate remained steady, and the average rate of return on household deposits rose slightly. It was able to increase the profitability of new credits granted and allowed banks to “margin” without rapidly increasing the rates of credit granted: especially since, with the change of customers and markets, the duration of credit is gradually decreasing”.noted Housing Credit.

Real estate loan rates likely to stabilize before falling to 3.30% in 2025

However, the number of loans disbursed continued to decline during this period. In December 2023, the average tenure of loans sanctioned was 248 months or 20 years and 8 months, “A level rarely seen in the past (13.6 years in 2001 and 17.1 years in 2014)”, according to the study. Although this period has remained roughly constant since last spring, it is no longer sufficient to prevent a rate hike in 2023, which has reduced household borrowing capacity by 16.7%.

For the year 2024, Housing Credit It envisages stabilization of real estate loan rates, with the average annual level hovering around 3.60% compared to 3.59% in 2023. A downward trend should follow at a relatively regular pace, reaching 3.30% in 2025.