Real estate credit: low rates extended by the European Central Bank (ECB)

There will be no interest rate relief for households seeking housing through credit. Good news for their budget and their borrowing capacity! We explain to you …

A year 2019 still under the sign of the low rates


Borrowers can blow. The GFI has expressed its intention to continue to pursue an accommodative credit policy. Specifically, interest rates will remain low throughout the year 2019. A surprise announcement while the high authority in charge of supervising the European banking system was to operate its key rates to raise borrowing rates.

Already pushed back time and time again, the rise in interest rates is expected to occur by the end of 2019 or the 2020 horizon. But nothing is yet fixed for good since the GFI originally planned to reshuffle its monetary policy at the end of 2018, before postponing its actions at the beginning of 2019 and then end up extending the period of low interest rates.

These chain turnarounds respond to the supposed economic fears in the event of a rise in the cost of credit. Indeed, the low rates are a great lever to encourage individuals and professionals to consume by borrowing. And the good dynamism of consumption is an essential component to growth within countries.

But the latest growth forecasts of the International Monetary Fund (IMF) are hardly encouraging on the future outlook. The GFI is therefore concerned that a rise in the cost of credit will have extremely negative effects on the growth of European territories, which are already suffering from an almost general slowdown.

Banks relax their credit conditions

Banks relax their credit conditions

However, this decision from the big European bank should delight banks and households. In this case, the former will continue to massively produce outstanding loans by granting attractive new credits and the latter will benefit from the advantages associated with low interest rates. In February 2019, the Good Finance Credit Observatory showed through its monthly survey an average rate of 1.44%, regardless of the amortization period.

But affordability is not only facilitated by the GFI’s monetary policy. In fact, bank professionals are also helping to expand the number of profiles potentially eligible for home loans with a relaxation of their requirements. Indeed, they are much more conciliatory with loans spread over longer periods. The Good Finance Credit Observatory argues that the average duration of loans never reached such high levels, with 230 months in February. To illustrate this trend, the organization states that the average has grown 24 months since 2013.

The purchase of credit to finance real estate

The purchase of credit to finance real estate

Now, if banks practice flexible policies on the conditions for obtaining a mortgage, some profiles still fail to fit their criteria. These homes, which find themselves stuck in the realization of their project of ascension to the property, can however turn to an alternative solution. In particular by approaching a bank intermediation expert such as Good Lender able to offer a buyback credit, an operation whose purpose is to consolidate all the loans of a home into a single monthly payment.

In addition to providing simpler budget management, this new monthly payment, levied once a month, can be reduced by 60% to better match the borrower’s resources. This leverage will reduce the overall debt ratio and offer the possibility of releasing a new borrowing capacity to finance the purchase of housing, for example, which will also include the single monthly payment created by the pooling of credits.

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