To grant mortgage loans, banks are increasing the number of schemes, especially for a section of the population.
This year, September and October are the best months to apply for a mortgage. Because after a difficult start to the year, banks are putting in place many measures to attract new customers. And among all the customers that banks want to capture, there is a part of the population that they are particularly looking to attract. For these French people, the offers are multiplying.
“This is a population that is very important for banking institutions,” confides Sandrine Allonier, a home loan expert. For this clientele, many measures are put in place: more advantageous rates, more flexibility on the contribution and the debt ratio, as well as much longer loan terms.
These are borrowers under 35 who want to buy their first home. After two years of crisis in the real estate sector, the idea is to get the machine going again, to attract customers again and particularly first-time buyers. In addition, it helps build loyalty: “Being able to support young customers during their first property purchase means being able to be at their side for other projects (car, new house)”, says Frédéric Figer, Director of Individual Clients at Société Générale.
However, access to housing is sometimes complicated. Young workers often have a lower salary than older borrowers and a small deposit. This is why there are many offers and discounts. Frédéric Figer adds, for example, that “by taking into account the characteristics of each file and market conditions, Société Générale tries to grant the best rates to young first-time buyers.”
According to Frédéric Figer, the typical loan for young first-time buyers is 180,000 euros over 20 years. With this amount and after a search on SeLoger.com, a young couple can afford a nice 3-room apartment in the heart of Bordeaux, Lyon, Lille, Toulouse or Marseille. To repay this loan, the young couple must pay 1,083 euros per month, according to the specialist site Empruntis. But this figure can change depending on the situation. Indeed, the monthly payment varies depending on the interest rate, the insurance rate and other factors.
In this simulation, with a monthly payment of 1,083 euros, a young couple with 3,094 euros per month could be granted this loan. Why 3,094 euros? Because the monthly repayments must not exceed a third of the household income, which is called the debt ratio. But again, it can be modified for first-time buyers.
Concretely, the High Council for Financial Stability has authorized banks to increase the debt ratio for a fifth of their files. This flexibility is mainly aimed at first-time buyers. There remains one factor that can change everything: the contribution.
In general, most banks require a minimum deposit of 10%. In the case of our young couple, this represents around 18,000 euros which will cover bank charges, notary fees and sometimes part of the purchase. An amount that some first-time buyers cannot advance. But once again, mechanisms exist to facilitate borrowing. “With young people, banks can be more flexible and review the minimum deposit downwards”, estimates Sandrine Allonier.
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