The month of June marks half of 2019. This is an opportunity to take stock of trends in mortgage rates. How did they evolve at the beginning of the year? What to expect for this second semester? What are the projections for 2020?
For 3 years, mortgage rates have not exceeded 2%. But since the beginning of 2019, rates have continued to fall, almost reaching the incredibly low rates of 2016. If the rates are currently around 1.35%, they are not likely to rise immediately. Experts agree that they will surely beat the record for the lowest rates. They are close to inflation rates, allowing borrowers to obtain very advantageous loans.
The consequence of these low rates is the extension of the loan term. If in 2017, the average was 17 years and 9 months, it is now 19 years and 1 month in the first half of 2019. The monthly payments are therefore lower, promoting access to bank loans for the most modest households.
In this context, the banking sector has become increasingly competitive. Indeed, the increase in the number of homes eligible for home loans has forced these institutions to offer increasingly attractive offers. Thus, the share of the personal contribution does not stop falling from year to year: for a few months, it is lower than 15%, against 30% in the years 1980.
However, be careful not to fall into the trap of the announcement effect. If the rates are indeed very attractive, we must not forget the price of the borrower insurance, which will certainly raise the overall cost.
Should we wait for a rebound?
A priori, it would not be for now. The current ECB (European Central Bank) policy and lower government bond rates do not favor a favorable environment for higher borrowing rates. For 2019, we should witness stability over the entire year. If rebound there must be, it will be necessary to wait 2021, even 2022. To return the bar of the 2%, 2 years will surely pass.
To sum up, mortgage rates are at an almost historically low level. The possibility of falling below 2016 rates is expected for the second half of 2019. In addition, the rise should be made to wait 1 or 2 years more. This is the perfect time to invest in real estate; the business environment will allow you to negotiate the best rate for your investment.