If many European states have been able to borrow at historically low or even negative rates, the question also arises regularly in terms of real estate credit. And if, one day, the banks came to grant loans to negative rates ? For now, this eventuality is unlikely, especially for individuals, especially since the latter rush massively towards credits has fixed rates. Our explanations.
Historically low rates, including for long-term loans
The France is among the States which do “ roll » the debt. Clearly, to pay off its debt, it borrows on the market; this new debt will subsequently be refunded using a another loan, And so on. It is interesting to note that the country enjoys of a favorable period : he borrows several billion euros at historically low or even negative rates – many investors and holders of capital who are ready to pay to put their money in a « safe place », in this case the accounts of the French State. The situation is all the more favorable since even the low rates even apply to loans of ten years or more.
This allows banks to build up significant savings. The establishments can thus afford to grant to individuals of the credits to low rates. The phenomenon started well before the coronavirus pandemic. In July 2019, for example, individuals had the choice of credits with some rate below 2%, even with a duration of refund twenty-five or thirty years old. More precisely, it was possible to obtain a ready at 0.70% over seven years, 1.10% over fifteen years, 1.25% over twenty years or even 1.80% over thirty years. THE rate are obviously still lower for the customers most well-off. At the same period, they could take out a loan at 0.6% over fifteen years, 0.8% over twenty years or 1% over twenty-five years.
Negative rates unlikely for individuals
The context could not be more favorable for individuals which project to acquire a Principal residence or to invest in rental. With banks offering particularly low rates, not to mention the different devices of tax exemption, Many households are taking the plunge. However, it is unlikely that banks will ever grant them negative rates. What we observe, however, are more or less occasional drops depending on the markets, periods or borrower profiles.
In any case, we will remember what to grant of the credits has low rate is a good business operation for the banks. This is a way to attract new customers, particularly among wealthy households. But this policy has its limits. By offering low rates, the banks see their margins decrease. They therefore do not have no interest to offer negative rates.
The role that variable rates play
The nature of interest rate influences the nature positive or negative of these. There are a few examples, notably in Denmark, Belgium and Germany, where real estate loans and consumption are granted to negative rates : the rate in question are variables. While it is unlikely that the banks grant to individuals French of the negative rates, it is because the borrowers favor to more than 99% of fixed rates.
