Every month, the Best Bank questions banking establishments about the level of demand for mortgage loans. During the month of March, the observation was as follows: the demand for housing loans continued to decrease… This observation can also be made over a longer period of time because this drop in demand is now lasting for a little over a year and can also be seen in many European countries today. The crisis we are going through is therefore clearly hitting the real estate and credit sectors, let us now try to identify the different reasons.
Declining household demand
When we talk about a drop in the number of mortgage applications, we most often talk about the role played by banks in explaining this trend, but it is not the only one.
In recent months, there has been a clear disaffection with demand, according to a study carried out by the Lite Lenders Bank, and the economic situation coupled with current uncertainties about employment does not encourage tenants to take action quickly.
Tighter European rules
Since the last financial crisis, and the fragility of the banking system that we have been able to observe, European directives and in particular the “Basel 3” agreements require banks to build up a higher level of capital, up to 10% of ” here at the end of 2018.
To achieve this, it is necessary either to increase the equity, or to decrease the assets and it is of course this second solution which was implemented by the network banks. The conditions of granting were thus tightened by the banks which require for example that the borrower is able to pay the additional costs and costs of file by a personal contribution, or that the situation after operation scrupulously respects the rate of debt (33% at present ).
A decrease in state support
The government’s spending reduction policy, which has been in place for many months, has not spared the real estate sector. Thus, for a little over a year now, the scope of the zero-rate loan has been reduced and the consequences are significant.
Previously widely used to finance the purchase of old housing, it can now only be used to finance the purchase of new or old housing refurbished.
The price of real estate
Despite the crisis we are going through, prices remain at extremely high levels. In the current context, buyers are becoming more and more demanding, and the goods that find takers are therefore those of very good quality and / or extremely well located. This configuration therefore limits the number of possible transactions on the market, and therefore directly the number of funding requests.
According to the various studies carried out, property prices in 2013 and 2014 should only fall slightly, by -1.1% and -0.4% respectively in the former, for example. Consequently, the number of transactions will also remain relatively low, around 700,000 per year and we should see a real rebound in the sector from 2015. However, the financing conditions being particularly favorable at present, this may be the right time to make an investment . Today, to motivate investors, banks and brokers focus on the particularly attractive rates of the moment, however this is not the only criterion to take into account when deciding to apply for financing. Your Wealth Management Advisor will best guide you through all the phases of your investment and the optimization of the arrangement of your bank loan.