Borrowers favour the older properties and await the new

After a February month in line with property market take-off forecasts, March is looking promising, for lenders and borrowers alike.

March 23, 2015 · Updated March 11, 2020

After a February month in line with property market take-off forecasts, March is looking promising, for lenders and borrowers alike. Purchasing power still on the rise, credit rates still falling, buyers are not mistaken and are gradually returning to the market… of the older properties. The new-build sector needs more time to get moving. If the return of confidence is confirmed, both property development and individual construction could soon pick up again.

Long live credit! Banks are lending. They have not tightened their lending conditions and have plentiful and cheap monetary resources. A situation set to last at least until summer. Liquidity from the European Central Bank (ECB) is indeed durably abundant, coupled with a floor refinancing rate of 0.05%. As for deposit banks, the proportion of funds they can use from their clients’ Livret A accounts could soon cost them only 0.75% in remuneration, compared to 1% currently.

Long live brokering! In this favourable context, mortgage brokers, led by CAFPI, are seeing their financing volumes increase significantly. Conquest of new market share or general recovery? It’s still too early to say, but the trend is clear and makes CAFPI optimistic for 2015. Its success is due, notably, to the very advantageous credit terms obtained for its clients: the highest rates it negotiated are on average 0.20% below national market rates. Taking on a 25-year fixed-rate mortgage, for example, now costs only 2.29% to 2.80% at CAFPI, compared to 3.06% generally.

Long live the older properties! The first to benefit from cheap credit are homeowners selling their main residence to buy a new one. Over 93% buy older properties. Their purchasing power has increased everywhere in France (except Marseille), driven by falling rates and prices:\

Rates. Compared to January 2012, for the same monthly credit payment of £1,000 (excluding insurance) over 20 years, it is now possible to borrow nearly 20% more capital while saving nearly 42% on interest!
Prices. In Nantes, Rennes and Toulouse, cities whose economic dynamism is undiminished nonetheless, it is between 14 and 15 m² of habitable surface that can be bought in addition, compared to January 2012. In these cities, particularly, it is the moment to buy!

Quickly, the new-build… If the residential property market is returning to colour in the older properties, the same does not apply to new-builds. The latest government construction statistics are not good. From November 2014 to January 2015, the number of building permits fell by -2.0% compared to the previous three months (-3.5% in individual, 0.9% in collective) and housing starts by -4.1% (-3.6% in individual, -4.5% in collective). While growth is becoming positive again and confidence seems to be returning, new-build housing remains absent… To the detriment of the market, buyers and the country’s economy.