Personal contribution now represents 25% of the total transaction

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The individual contribution share required by banks in housing loans increased by 78% over the last year. The minimum amount required is now close to 25% of the total transaction value. There are differences across the country, with records being reached in some regions.

Interest rate rise continues

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Bad news for those who have to borrow money to buy a home: Mortgage rates continue to rise, increasing the down payment required to get a loan.

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The growth observed since the beginning of the year was confirmed. “From January to the end of April, the average interest rate increased by 0.45% over a 20-year period and is now around 1.45%,” Meilleurs Agents reports. In just four months, more than three years of decline was erased.

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Olivier Lendrevie, head of broker Cafpi, says, “The rate of increase in real estate loans remains limited. In April, our clients averaged 1.13% over fifteen years (vs. 1.02% in March); 1% in twenty years. .21 (vs 1.11% in March) and 1.39% in twenty-five years (vs 1.30% in March). »

For brokerage firms, it is clear that conditions for obtaining mortgages have tightened since the beginning of the year. In addition to the increase in interest rates, borrowers should now also consider tightening the rules introduced by the Supreme Board of Financial Stability (maximum debt ratio is 35%, borrowing term is limited to 25, including borrower insurance). years, reducing the likelihood of deviating from these standards for the loan file), on the other hand, reducing the rate of attrition of loan terms in certain circumstances (including the maximum rate a person can borrow, insurance).

Banks’ attitudes have also changed in recent months. Ludovic Huzieux underlined that “they are increasingly cautious towards the rich”. They look at the property’s condition, insulation levels, and energy consumption, as well as the price per square foot of purchased goods. Mr Huzieux said they were increasingly asking for “proposals for renewals to assess their share of the overall financing”.

Personal contribution: large variations depending on region

Another difficult issue is personal contribution. Individual contribution demand increased by around 80% in the first quarter of 2022 compared to 2021, with an average contribution of 52,594 euros in the first quarter of 2022, reaching a maximum of 29,405 euros in 2021.

Some geographic areas are more affected than others. This applies to the regions of Provence-Alpes-Côte d’Azur, Nouvelle-Aquitaine and Hauts-de-France. At PACA, the average contribution level exceeds 30% of total operations. In New Aquitaine, it was 21.7%, up 129%. In the Haute-France region, its contribution is 19.3% (ie an increase of 105% in one year).

Ile-de-France broke all records with an increase of 54% in one year, €85,985 was enough in 2021, now requires an average personal contribution of €132,899, almost double. On average across the region, 19.5% (previously 17.8%) of the transaction value should be allocated to the financing of existing residences and 17.4% to the financing of new residences.

As a result, limited access to credit inevitably affects low-income households and young first-time buyers who already have to cope with rising property prices and declining home ownership assistance. If they add a mortgage to their miscellaneous expenses, they can easily exceed the maximum debt ratio of 35% of net income, which is still a major barrier to project purchase, although interest rates are still low.

These more economically vulnerable citizens can hardly count on the leniency of banks, which can only deviate from the restrictions imposed by the HCSF and acquire prime housing within 20% of first-time buyers’ quarterly output.

Source From: Google News

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