The European Central Bank has just lowered its main interest rate to 3.5%. And in the United States, the Fed is due to announce its first rate cut since March 2020 today. “Since the end of August, the borrowers have been back”assures Sandrine Allonier. “The phone is ringing again in real estate agencies, visits are resuming. We really feel this dynamism returning to the real estate market. Credit applications have increased by 50% compared to last year, at the same time, which was admittedly a low point. And there is room for negotiation that can be made: we feel that fluidity is returning to the market.”
What made the market swing the other way after months of gloom? “The real breakthrough is this drop in credit rates, by almost one point. We went from 4.3% to 3.5% on average in one year. This really helps to make things more solvent: with the same salary, you can borrow 15,000 euros more than a year ago. This is significant.”
“It won’t go back down to 1%”
Sandrine Allonier sees in particular a return of “second-time buyers”, “those who ultimately move to buy bigger, and who will therefore free up small areas for first-time buyers. They had completely disappeared from the market, because they had borrowed at 1% a few years ago, and did not want to give up a 1% loan to take out a 4% loan. So those who had a baby or who wanted bigger or who wanted a garden had put their project completely on hold, and we had a market blockage. They are coming back thanks to bridging loans, because the banks are granting them again.”
On the other hand, she assures that the rates “will not go back down to 1%”. “That was the post-Covid era, of whatever it takes. But we are considering, with perhaps a new rate cut by the ECB at the end of the year, that we could find rates at 3% at the beginning of next year. So it is becoming interesting again.”
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