Wear rate, personal contribution, precautionary savings: how to obtain your mortgage in 2023?

Access to real estate credit has become difficult since the summer of 2022. To cope with the sharp rise in borrowing rates and the usury ceiling, borrowers must strengthen their solvency and present a substantial personal contribution, coupled with significant precautionary savings. Magnolia.fr tells you all about the borrowing conditions at the start of 2023.

Record personal contribution

Mortgage interest rates are at their highest since 2016 with a average around 2.60% (except borrower insurance and cost of collateral) over the standard term of 20 years. Looking in the rear view mirror, we see that rates have more than doubled since the end of 2021: at the time, it was common to go into debt at the 1% gross rate on this maturity.

Faced with the increase in the cost of money, combined with the standards for granting mortgages which prevent borrowing beyond 25 years and exceeding a 35% debt ratio (based on net income, loan insurance included), banks become more and more demanding vis-à-vis borrowing households. All the more so since real estate prices are showing little or no decline: the prices of old buildings have increased on average by 6.4% in 2022.

We see a very strong increase in personal contribution in 2022 and according to the latest figures from the broker Cafpi, the record has been reached with an average that now exceeds the €60,000 per mortgage for a first-time buyer. An average that obviously hides disparities related to the high cost of real estate.

In Île-de-France, the region where the average prices are the highest, the down payment exceeds the €86,000i.e. close to 20% of the transaction amount. In Hauts-de-France and in the Grand Est region, the starting bet varies between €36,000 and €38,000. However, it is in the South-East region that the contribution is progressing the fastest, rising from €60,000 to €76,000 in one year.

Precautionary savings imposed

L’personal contribution has the virtue of reduce the use of bank loans and therefore minimize the risks taken by the lender. It also allows to reduce the repayment periodwhich lowers the borrowing rate.

But for further secure the sums lentthe banks are even stricter in demanding a precautionary savings. No need to dedicate all your savings to the constitution of the personal contribution, because it is necessary to keep at least a residual savings equivalent to a year of monthly loan payments to reassure the banker. This is another observation made by the broker Cafpi in recent months.

Boost your personal contribution with employee savings and reserve sufficient precautionary savings that can intervene in the event of hardship.

Banks are becoming more and more hesitant to grant mortgages in a context marked by a drastic drop in purchasing power considering thesurge in inflation. They now ask the borrower to secure his credit with 4 types of guarantees:

  • L’home loan insurance which comes into play in the event of the vagaries of life (death, invalidity and incapacity)
  • The mortgage, the privilege of the lender of money or the bail to make up for payment defaults
  • L’personal contribution and theprecautionary savings which testify to the financial effort of the borrower to set up his real estate project.

Monthly wear rate at 1er February 2023

Access to credit tightened in 2022 due to a regulatory issue: wear rate prevent them from borrowing because they stay frozen for three monthsunable to react to the constant increase in interest rates. Alerted on many occasions by credit brokers, but also by banks and notaries, the Banque de France agreed last week to carry out a temporary adjustment : from 1er February 2023, the wear rate will be monthly until the end of June 2023. A victory for credit and real estate professionals which will make it possible to loosen the lock each month.

From 3.57% for loans with a duration of 20 years and more, the rate of wear should rise to 3.75% on February 1 and at 3.95% on March 1, according to projections by the broker Cafpi.

The monthly payment of the wear rate will also have the effect ofaccelerate the rise in borrowing rates, because the banks will benefit from greater latitude to adjust their rate schedules to monetary constraints. This is the flip side of the coin for access credit more easilywhich may seem paradoxical, but is explained by a revision of the maximum legal rate in the future, which will be more rapid.

Mortgage will become more expensive in 2023! Save on borrower insurancethe only lever for reduce the cost of borrowing and stay under wear.

Leave a Comment