In 2013, the duration of home loans was between 15 and 19 years. More than half of the loans were contracted in less than 20 years. In recent years, the increase in credit terms has been inversely proportional to the low interest rates. Since the beginning of the year, 41.5% of loans have been signed for 25 years. In February, banks extended credit over 20 years to nearly 8 out of 10 buyers. Credit production has evolved considerably, with long-term loans now readily available.
Retain on the real estate market young first-time buyers
The average duration of mortgages reached peaks in February 2019, with an average of 230 months, compared with 223 months in 2007, according to the Housing Credit Observatory-CSA . This increase in the duration of mortgages, clearly visible for 2 years, allows young first-time buyers to benefit from loans with a reduced personal contribution.
Banks have indeed opened up the solvency criteria to allow them to borrow even with modest incomes. Thus, the observatory notes that nearly one out of two borrowers under the age of 35 was able to borrow for a period of 25 years or more in the last quarter of 2018. First-time buyers also benefit from the lowest interest rates. (1.63% over a period of 25 years for the entire market). They also benefit from the opening of real estate loans without contributions, or almost.
Banks can thus bring more and more young borrowers into their portfolios by agreeing to reduce their appetite for personal contribution. In 2018, the personal contribution amounted, on average, to 16.1% of the amount of the purchase, which is 8 points less than 5 years ago.
Compensate for the decrease in public aid
State aid for homeownership is decreasing. In 2019, the zero-rate loan was refocused on high-voltage zones (A and B1). But it was often the personal contribution of young first-time buyers. At the same time, the APL accession has been abolished for new acquisitions since 2018 and will also be eliminated on old real estate from 2020 . Pending this deletion, only rural areas and medium-sized towns are eligible.
As a result, the banks had to make an unprecedented effort to keep first-time buyers in their fold , especially on the amount of the personal contribution. This easing was all the more necessary as real estate prices are growing faster than incomes. Without this easing, the market would have seen, according to the observatory, a sharp decline in both old and new.
However, not all bank valves are open. Banks are beginning to limit the agreement of mortgage loans beyond a period of 25 years . Only young borrowers (<40 years), first-time buyers, with modest incomes still benefit from such a period.