In the wake of the European Central Bank’s cut in key rates, borrowers are benefiting from a favourable context.
Borrowers are celebrating. New mortgage loans rebounded in July to their highest level in over a year, according to data released Friday by the Banque de France, as interest rates continued to fall. The total amount of new housing loans excluding renegotiations amounted to €11.3 billion in July, compared to €8.6 billion in June and €8.1 billion in May.
This figure has not exceeded 10 billion euros since July 2023, and we have to go back to May 2023 (12.1 billion) for a higher level. The rebound comes after the worst half-year in ten years for real estate credit, in a market where buyers, stuck between still high rates and prices that are not falling or are falling only slightly, are rare.
The average interest rate (excluding fees and insurance) on these new loans stood at 3.64% in July compared to 3.70% in June and has fallen by 0.53 points since the peak reached in January 2024, the Banque de France specifies. The price of credit is still well above the 1.8% at the start of 2022.
A favorable context for borrowers
“We had seen a reversal of the trend since the end of the first quarter” with a bounce “sawtooth” since April, underlined Marie-Laure Barut-Etherington, deputy general director in charge of statistics at the Banque de France.
“The context has clearly become more favorable for borrowers” with, in particular, “a drop in the cost of credit which began at the beginning of the year” in the wake of the drop in key rates by the European Central Bank and commercial offers from banks, she said. “The continuation of the decline is obviously conditional on what the ECB does.”
Especially since, as the July statistics reflect loans signed this month but negotiated before the summer, a summer slowdown – traditionally a quiet period for real estate transactions – is not excluded and could be seen in the autumn figures, indicated Ms Barut-Etherington.
But the favorable context “has not changed since May-June”she added. “From the beginning of 2024, banking establishments wanted to revitalize a real estate credit market that was sinking into recession”also commented the Crédit Logement/CSA Observatory on Thursday. “It seems that the worst is behind us, both in terms of activity and prices”also supported on Tuesday Thomas Lefebvre, scientific vice-president of the SeLoger-Meilleurs Agents group.
