INCREASE THE SMIC WHAT A REAL ESTATE PURCHASING POWER !

THE SMIC REAL ESTATE ! 

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To partially satisfy the multiple claims of yellow vests, Emmanuel MACRON announced Monday, December 10, 2018, the increase in SMIC of 100 euros from January 1, 2019. We are entitled to ask the actual impact of this increase on real estate purchasing power.

THE BUYING CITY FACTOR TO CONSIDER

The city in which the borrower wants to buy his property must be taken into account. The purchasing power of real estate becomes wider for medium-sized cities.
On the other hand, it is insignificant for expensive cities. Thus, the borrower can buy a larger home in cities like:
  • Grenoble,
  • Rouen
  • or Marseille,
in the order of 5 to 7 m² more.
In contrast, the impact is non-existent for agglomerations such as
  • Paris,
  • Bordeaux
  • or Lyon.

THE BORROWING FACTOR

For an employee remunerated at the SMIC, an increase of 10,000 euros is possible for a loan with a duration of 25 years in 2019.

The borrowing capacity of 10,000 euros can be a response to the banks' requirements. As a reminder, they require a debt ratio of 28% to 33% to compensate for too high monthly payments. In addition, credit institutions control the rest to live.

The rest to be lived is composed of the salary to which the expenses of the daily life are subtracted.

THE PRIME FACTOR OF ACTIVITY FOR BANKS

The € 100 increase in the SMIC actually corresponds to an increase in the activity premium of € 80 and a reduction in charges of € 20.

Although this increase is not specifically an increase in the minimum wage, it is considered as an additional purchasing power for SMIC beneficiaries.

In this case, the banks may estimate that the increase in the activity premium of € 100 per month is sustainable. Thus, it can be included in the calculation of the borrowing capacity for the possible granting of a mortgage.

For a borrower, it is best to contact a banking institution that agrees to consider the activity premium as income. As such, 50% of banks in the square want to participate in this device for now. It should be noted that the activity bonus is paid by the CAF or Caisse des allocations familiales.

THE CONDITIONS REQUIRED TO BORROW WITH A SMIC

You can borrow with a salary to SMIC. We must not have a high debt ratio, too many credits in progress and not be in a bank overdraft position.

Apart from the study of revenues, banks will also check the load jump. The load jump is illustrated by the surplus that the borrower has to pay according to the amount of the rent due to repay his loan.


For the moment, the banks remain in expectation as to the effective increase of the SMIC. We can estimate the net income of an employee at SMIC which is currently 1,184, 93 € reach 1,285 €, for an average increase of 8.4%.

We can also note a borrowing capacity of more than 56% by adding up the increase in the SMIC and the rates divided by 2 since 2010, for reference.

thanks for the time .

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