rates are falling but we have to negotiate

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According to bank scales, mortgage interest rates will be a little lower in August than in July. This good news should not make you forget to negotiate your credit.

After a rise in April and May, real estate rates have been falling since June. In July, all hardships combined, they fell, on average, by 0.04 point, 1.25% excluding insurance, according to the Housing Credit Observatory / CSA. For August, reading the new bank scales, real estate brokers believe that this trend will continue.

While many French people are already on vacation, mortgage rates are once again slightly lower, explains Mal Bernier, director of communications at Meilleurtaux. According to the latter, the scales are, for August, down 0.10 points for a 20-year loan and even 0.15 points over 15 years. Some banks have communicated lower limits of their schedules, but this has not had, this month, an impact on the barometer, put the broker Emprunt Direct into perspective.

Average real estate rates for August 2020

Concretely, individuals who know how to ask their bank for a real estate loan will on average be offered:

  • Over 15 years: 1.10% according to Meilleurtaux, 1.35% according to Direct Loan, 1.25% according to Cafpi
  • Over 20 years: 1.30% according to Meilleurtaux, 1.50% according to Direct Loan, 1.45% according to Cafpi
  • Over 25 years: 1.65% according to Meilleurtaux, 1.75% according to Direct Loan, 1.65% according to Cafpi

These average rates were calculated by brokers on the basis of the scales sent to them by the banks. At this stage, these rates have not been the subject of any negotiation between the client, the broker and the bank. They do not take into account the cost of borrower insurance.

Philippe Taboret, deputy managing director of Cafpi, sees these cuts in particular as a sign that the banks want make up for the two months of confinement: This summer period is usually conducive to the realization of real estate projects, it comes just after the definition and allows banks to make up for part of the production delay caused by the Covid-19 pandemic, he says.

0.40% discounts obtained after negotiation

On the other hand, for the best cases – buyers who combine high remuneration and a consequent contribution of more than 20% of the amount of the property – the loan terms remain stable this month. But interest rates were already back below the 1% mark in July and are still there, said Mal Bernier. Thus these excellent files can obtain credits for main residence financing of around 0.80% over 15 years and 0.95% over 20 years, details the director of communication of the broker Meilleurtaux.

For these wealthy households, as for the more modest borrowers, the best discounts are usually obtained after discussion. There is a widening gap between the posted rates and the rates actually charged. Cafpi has negotiated rates on average lower than 0.40% on all durations with its partner banks, underlines Philippe Taboret in this regard.

Read also: Why a good contribution is not always enough

Watch out for summer holidays

But, in this quest for the best loan conditions, the the summer is the enemy of households. In great demand in the spring to process the colossal influx of applications for state-guaranteed loans from companies, the bankers went on vacation. Many banks do not have cells available for processing files at the start of this month. If the phenomenon were to generalize in a too durable way, this would be likely to compromise the dynamics of production of housing credit, which had tended to restart after confinement, fears Alban Lacondemine, chairman of Direct Loan.

In this context, to avoid losing the house or apartment if the borrower fails to obtain financing, brokers recommend play on the suspensive condition present in the sales agreement by extending the time limit. This is generally 45 days. I cannot recommend enough to allow a period of 3 months until the final signature in order to allow time to put together the financing file without stress, suggests Mal Bernier.

Consult our comparison of the best rates for a real estate loan

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