Tuesday, 27 November 2007

The real estate credit over 50 years

The real estate credit over 50 years arrives on the market french Through a partnership with the Spanish bank Kutxa, broker mortgages Cafpi distributed in the french territory credits over a period of 50 years. This initiative is mainly designed for atypical profile borrowers.

By dint of seeing housing prices soar since 1998, households no longer afford to follow. Credit institutions have found the parade: nothing like a longer-term loan to solvent clients who, under the usual conditions, can not access the property.

This method recipe for several years. The average real estate credit is increased from 12 years in 1995 to 19 years in 2006. And it is not over. The broker mortgages Cafpi will distribute funds spanning a period of 50 years, through partnership with the Spanish bank Kutxa.

"The credit for all department responds to the request of borrowers atypical profile by broadening the criteria for admissibility bank" says the broker, "youth with a work contract precarious uninsurable or people with financial difficulties providing timely but guarantees ".

Specifically, for a monthly repayment of 1,000 euros, an individual can borrow 165,000 euros over 20 years (at a fixed rate of 4.05% excluding insurance), 195,000 euros over 30 years (with a fixed rate of 4.60%) and finally 225,000 euros over 50 years (but at a rate not revisable capped 4.90%). Either increasing its borrowing capacity by 36% in this specific example.

But the cost of credit, to be borne by the borrower, is much higher when the life of the loan increases. Especially since this loan has an adjustable rate, according to the increase in interest rates short term (Euribor 1 year + a margin of 0.9%).

In summary, if the arrival of the long term debt is good news for the banking world, it is much more difficult for french households.