Mortgage and rising rates: should you persevere or wait if the banks refuse your loan?

With rates having exceeded 2% on average, it is becoming increasingly difficult to pass your file to buy your property. But the rise is likely to accelerate in 2023.

Loans that fall through due to a delay and a new file that is no longer going through the bank… A budget that was closed a few months ago but which is no longer due to the inflation and the economic context… Many potential buyers can no longer afford the house or apartment of their dreams due to a fairly steady rise in interest rates.

According to a survey of the world, banks lent, in new housing loans, 8.5% less in the third quarter of 2022 than in the third quarter of 2021. Over the same period, sales of goods fell by an estimated 27%. A year ago, mortgage interest rates were still below 1%. They have just crossed that of 2%, which changes a lot of things in the budgets of borrowers who go into debt for 25% on average (2.17% for this duration). 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, except in the very long term. Especially since specialists point out that even a loan at 2.5% remains cheap compared to inflation at 7%.

Contact several banks

It remains to be seen what attitude to adopt in the event of refusal by one or more banks. Financial institutions are clearly cautious because the profitability of home loans has melted in recent months. The valve is however not completely closed. The first advice given by the experts is not to be discouraged by a refusal and to contact several establishments. “We continue to serve our customers and we 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 the event of a bank’s refusal, you should not hesitate to submit your file later. A breath of fresh air is indeed expected in the sector at the start of 2023. Obviously, the financial contribution of the buyer will become more and more essential. A contribution of 10 to 15% of the amount of the purchase is likely to reassure the banks, both on the savings capacity of the buyer and on the feasibility of the financial package.

Set up a reasonable project

Indeed, with the rise in the interest rate, it is generally the famous maximum stubbornness rate of 35% that is exceeded and causes applications to fail. Here again, the specialists affirm that the door is not closed if one mounts a reasonable and well-prepared project. Keeping a financial leeway in your budget for an unforeseen event is essential, even if it means reducing the size of your dream a little. It is at this price that it can become reality.

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