Real estate: Borrowing Without Contribution Thanks to Low Rates

In 2016, falling mortgage interest rates benefited a good number of borrowers. In the face of historically low rates, buyers have responded to the market. The latter has experienced record activity since the 850,000 sales mark has been crossed. As a reminder, the previous record peaked at 832,000 transactions and dated back to 2006. For its part, during these ten years, the purchasing power of real estate has increased significantly.

 

Low rates and rising real estate purchasing power stimulate the market

Low rates and rising real estate purchasing power stimulate the market

According to industry professionals, the increase would be about 30%. That is to say that at equal monthly rate, a borrower of 2016 could claim a larger real estate area is an additional 30 square meters for an initial area of ​​100 m². Last year, the best borrower profiles were able to benefit from exceptional financing conditions. Home loans have even been contracted with rates below 1%. If for the first quarter of 2017, interest rates seem to be on the rise, it remains light. Buying a property therefore remains an attractive option for investors.

 

Real estate loans without contribution progress

Real estate loans without contribution progress

To attract a clientele of borrowers with strong profiles, banks are ready to make significant efforts in the allocation of their credit. This trend encourages even some French to subscribe a real estate loan without justifying a personal contribution. The mortgage without contribution allows them to avoid advancing several thousand euros. If in practice the banks often ask for a personal contribution of about 10% of the amount of the real estate transaction, they authorize full loans. This funding therefore includes transfer fees commonly called notary fees.

The proportion of non-equity loans also increased in 2016. According to some brokers, they represented up to 15% of their financing against 5% in 2009. If the banks are ready to “play the game” it is above all because the financial risk is relatively low for them. By lending on the long term for less significant monthly payments, they reduce the risk of unpaid during the term of the loan agreement.