Resumption of credit production confirmed this summer and credit rates remain at their lowest!
In September, little movement on the loan rates which remain at the lowest, after the few decreases observed in August. In this context, the Cream bank confirms the resumption of credit production in July, which for the first time in one year has exceeded 17 billion USD in new credits in July. A summer recovery that Good lender, a network of 185 credit brokerage agencies, has also seen in recent months. Analysis
Credit production at its highest for 1 year in July
As announced by Good lender at the start of August, the real estate market, and in particular credit production, has regained unprecedented dynamism in recent months … “After a 1 st quarter of 2018 marked by a wait-and-see attitude from buyers and a demand for credits down by 20%, these In recent weeks, the real estate market has regained unprecedented dynamism in 2018. While in 2018 loan renegotiations fell by 75% at Good lender, credits for acquisitions in old or new are up 20%, testifying to a resumption of transactions, spokesperson for Good lender
Even though the share of loan renegotiations fell from 20.4% of loans in February 2018 to 16.2% in July.
However, this recovery is not enough to make up for the delay taken at the start of the year… the cumulative production reached since the start of the year 115.5 billion USD against 196 billion USD over the first 7 months of 2017… but a return to the level of 2016.
But this increase is explained as much by the resumption of transactions as by the increases in loan amount, thanks in particular to the lengthening of terms …
At the end of July, in 2018, the average loan amount was $ 178,200 over an average duration of 21 years and 4 months compared to $ 168,300 at the end of July 2017 over 20 years and 11 months.
However, even with this revival of activity observed in the 2nd quarter, it is unlikely that the 2017 credit production levels (272 billion USD) will be reached again this year. We should rather return to the level – in record time – of 2016, at 252 billion USD of credit production. At Good lender, as of August 31, 2018, credit production was down 9% compared to that of 2017 in the same period … But it was down 20% in the 1 st quarter compared to 2017, reflecting of this return of demand… In July and August alone, it is up 10%!
Little movement in rates in September
In September, a month traditionally rich in real estate transactions after a usually calm summer, banks tend to lower their rates slightly to address this return with good pricing positioning. This year, after a dynamic summer, and rate cuts in July and August, only a handful of banks have so far changed their lending rates (0.10% on average) even if they continue to practice rate reductions on a case-by-case basis, depending on the profiles “Overall, we are almost at the historic low and the margin for decline is today limited… Already, at this rate level, some banks are wondering about the profitability of loans granted at this level of rate which could become negative in the event of increases in refinancing rates. But for the moment everything indicates that by the end of the year the rates should remain very attractive, and the banks still as inclined to lend, including on long durations … “underlines , spokesperson to finance yourself.
Average rates are currently 1.30% over 15 years, 1.50% over 20 years and 1.70% over 25 years but with negotiated floor rates at 0.65% over 15 years, 0.80% over 20 years and 1.35% over 25 years for the best profiles.