Mortgage and interest rate hikes: should we persevere or wait if the banks refuse the loan?

With rates that have averaged over 2%, it is becoming increasingly difficult to pass your case to buy your property. But the increase is likely to accelerate in 2023.

Loans that fail due to a delay and a new file that no longer passes through the bank… A balance sheet that was closed a few months ago but is no longer due to inflation and the economic context… Lots of potential buyers can no longer afford their dream home or apartment due to a fairly continuous rise in interest rates.

According to a survey by Le Monde, banks lent 8.5% less in new home loans in the third quarter of 2022 than in the third quarter of 2021. In the same period, asset sales recorded a estimated drop of 27%. A year ago, mortgage rates were still below 1%. They just surpassed that by 2%, which changes a lot in the budgets of borrowers who borrow an average of 25% (2.17% for this term). According to some projections, they could reach 2.4% at the end of the year and settle at 2.8% in June 2023. Waiting is therefore not necessarily a good calculation, if not in the very long term. All the more so as specialists point out that even a 2.5% loan remains cheap compared to 7% inflation.

Contact several banks

It remains to be seen what attitude to adopt in the event of a refusal by one or more banks. Financial institutions are clearly cautious as home loan profitability has melted away in recent months. However, the valve is not fully closed. The first advice given by the experts is not to be discouraged by a refusal and to contact more structures. “We continue to serve our customers and remain attentive to requests, credit is also an instrument of conquest” assures Le Monde Nicolas Balerna, director of retail banking at Caisse d’Epargne.

Do not hesitate to represent a file

In case of refusal by a bank, do not hesitate to submit the file at a later time. Indeed, a breath of fresh air is expected in the sector in early 2023. Obviously, the financial contribution of the buyer will become increasingly essential. A contribution of 10 to 15% of the purchase amount risks reassuring the banks, both on the buyer’s savings capacity and on the feasibility of the financial package.

Set up a reasonable project

Indeed, as the interest rate rises, it is generally the famous 35% stubbornness ceiling that is exceeded and causes applications to fail. Here again the specialists say that the door is not closed if a reasonable and well-prepared design is fitted. Keeping some financial leeway in your budget for an unexpected event is essential, even if it means shrinking the size of your dream a bit. It is at this price that it can come true.

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