Balance sheet of real estate loans in 2023: what is the extent of the damage ?

© Scott Graham/© Unsplash

The time to take stock had already come for the real estate market in 2023, which was clearly in decline. While there are several factors to take into account, the most important being the increase in mortgage rates which have exploded in a very short time.

Rates that have quadrupled

In just 2 years, borrowing rates have gone from 1 to 4.5% regarding real estate. This is how in December 2023, the average rate for all durations combined was 4.11%, while a year earlier it was 2.12%.

Almost double while there was no real possibility of knowing at the time how difficult it would become to take out a mortgage in 2023.

Difficult granting conditions

Of course, the sharp increase in the cost of real estate loans largely explains the drop in production in this year 2023. In this inflationary period, banks have tended to lock in real estate loans by granting them sporadically.

To obtain a loan in 2023, it was absolutely necessary to have a solid record for help a stable job, a high salary and a contribution of at least 25%. Although the conditions for obtaining loans tended to improve in the latter part of the year, it will be necessary to wait a while before the decisions taken by the government and the BCF have repercussions on the granting of real estate loans.

A predictable drop in credit volumes

While credit costs have exploded compared to 2022, real estate prices have only seen a slight drop, largely insufficient to make up the difference created then. Thus, the drop in real estate loan production reached a staggering 40% compared to last year, going from 218 billion to 130 billion euros.

Unsurprising since the real estate market is rather down at the moment. Fortunately, the European Central Bank expects borrowing rates to fall in conjunction with falling inflation, which is estimated to happen in 2025.

• In December 2023, the average borrowing rate for real estate loans for all durations was 4.11%, while a year earlier this this was 2.12%
• In addition, the conditions for granting real estate loans have been numerous and complicated, with banks tending to grant as little credit as possible in this inflationary period.< /li>
• The drop in real estate loan production reached the staggering sum of 40% compared to last year, going from 218 billion to 130 billion 'euros.

📍 To not miss any news from Presse-citron, follow us on Google News and WhatsApp.

[ ]