In 2014, 96% of mortgages were granted at a fixed rate . A percentage significantly increased, since it was 80% in 2004. However, most borrowers, having opted for a variable rate since 2008, are winners. Boosted by fierce competition from banks eager to win new customers, each interest rate can be discounted depending on the quality of the file filed .
What is the level of fixed rates?
By favoring fixed rates at revisable rates, the borrower knows the amount of his monthly payments over the life of his loan. Otherwise, changes would be automatically made – downwards as well as upwards – according to the benchmark.
Currently, the fixed rate of a mortgage can be between 0.50% and 1.90%, for a loan over 7 years . It will be from 1.08% to 2.60% over 20 years, while it will reach 2.05% to 3.25% for a period of 30 years. (Source: France Transactions at 01.11.16)
These exceptionally low rates contributed to the disappearance of variable rate loans , which now represent only 0.1% of loans granted at the end of June 2016, whereas they represented 6.2% in 2013 and 22.1% in 2004. (Source: CSA Observatory / Housing Credit)
How does the bank set the interest rate of a credit?
Each bank sets its interest rate based on several factors:
- The cost of refinancing: in other words, the price at which the bank buys the loan money. Today, it relies on long-term products for fixed rate loans and Euribor 3 or 12 months for variable rate loans.
- The margin of the establishment: traditionally between 0.50 and 1.50%, it is built according to the estimated risk.
In other words, the attractiveness of the interest rate is directly linked to the file presented: if the latter presents only a few risks, it is possible to obtain discounts of 0.20% to 0.30% per annum. report to the official fee schedule . And brokers know how to play on these criteria!
What are the criteria to improve my rate?
Currently, banks are engaged in a fierce war to win new customers. The goal is to capture the good records (naturally!), With at least 10% of the amount borrowed as a personal contribution, stable income and a reasonable debt ratio. And, ideally, do not record overdraft on his bank accounts.
But not only, since the banks also welcome first-time buyers, with more modest resources. Public receiving financial aid as (Ready to Zero rate) PTZ reinforced since 1 January 2016.
However, not everyone benefits from these attractive rates, since banks look very closely at some of the additional criteria, to minimize their risks: the added value of their clients (the permanent contract status, the marital status, etc.) and the nature of the real estate to facilitate, if necessary, its resale (location, general quality …)
The mortgage broker knows exactly the criteria of its partner banks: it will know how to drive your loan file until obtaining an optimal offer, negotiating, with more and just and relentlessly, the rate, the insurances and the various fresh.