It’s harder to get credit today. But those who do get a very attractive rate. For how long ?
Has there been a tightening of credit conditions? That was the question we regularly asked this year to banks and brokers. On this point, opinions are divided. Some estimates that banks have become more demanding, claiming a contribution of 10 to 20%, a stable job, a maximum debt of 30% instead of 33% to 35% previously granted … Others believe that the terms of credit n did not change one iota, because the French banks were already very cautious. Basically, so much the better. As an acquirer, this hardening would be positive in all cases: if you are denied credit, it is likely that you will have trouble paying your monthly payment.
More attentive on creating financing plan for potential buyers
In this case, is it really time to buy? If you are a seller, this situation will make you more attentive to the financing plan of potential buyers. And you will limit the risks of signing a compromise that will not succeed then for lack of loan granted. Another good news: credit rates have almost never been so low. “We are not far from the record of 2.95% over fifteen years reached in October 2005,” said credit expert, deputy general manager of CF Lending Inc. Above all, if the average rates are already very attractive (see table), the best profiles manage to obtain much more attractive conditions, from 0.2 to 0.3 points below these averages.
Variable rates at new attractive
And, to get an even better rate, remains the option of the variable rate, again very competitive. The fact that the EEC Bank’s rate cut at the lowest level since the birth of the euro has an impact on short-term rates, which in turn directly affect floating rates. So, today, “we can get a variable rate capped 1 to 3.40%,” experts says.
If the banks decided to fully pass on the improvement of their refinancing conditions, credit rates could fall further by the end of 2012. Especially since the decrease in the amounts lent since the beginning of the year could push financial institutions to be offensive again. Everything will of course also depend on the evolution of the global economic context. The fall in interest rates has survived the downgrade of France’s rating by Standard & Poor’s. If Moody’s and / or Fitch followed, rates could get off again.