In 2019, almostone in three French people repay a mortgage. This is one of the highest figures since 1990.
Taking advantage of the exceptional interest rate conditions, many would-be buyers and lenders are being granted loans on the following terms long durationsand at rates high levels of debt. The marked improvement in household morale is no doubt a contributing factor, and at the start of 2020, almost 5% of households surveyed plan to take out a property loan, taking advantage of the historically low average borrowing rates.
Will banks be changing in 2020?
Over the last few days, a number of alarmist articles have appeared in the specialist press. They speak of a tighter lending conditions and recommendations made to banks to meet certain conditions: in effect, the Haut Conseil à la Stability Financial Committee has looked into the matter.
Chaired by the Minister for the Economy, the HCSF is a regulatory and supervisory body, issuing recommendations to banks and the French financial system as a whole.
A few days ago, this body issued the following recommendations to banks:
- Ban on loans for more than 25 years
- Reduction in financing agreements beyond 33% of debt
The press reacts with alarm
According to the Governor of the Banque de France, "these instructions must apply to all new loans submitted since January. The excesses must stop, and behaviour must change, quickly".
Banks are even reported to have started tightening their loan approval conditions.
The consequence is simple, according to the president of the FNAIM (the French real estate federation):
"The risk is that it will restrict access to home ownership for the most modest households, and in particular first-time buyers, by forcing them to resort to increasingly high deposits".
In figures
In 2019, 20% of credit applicants exceeded 33% of debt, which therefore concerns 250,000 households.
The restrictions that could be applied mainly concern the lowest incomes, and some estimates suggest that between 8 and 12% of new policyholders could be excluded by these recommendations.
Our analysis
Although a slight rise in rates is being felt at the start of the year, this is only a temporary effect. cyclical rise, inherent in every new year. Banks are continuing to lend, although their analysis does not appear to be any more drastic than before the HCSF's recommendations.
Some banks even seem to be much more aggressive in the quality of their proposals than they have been before.
2020 therefore kicks off in a very favourable banking environment for home loans. The banking criteria remain the same as for 2019, but the HCSF has confirmed the rigour with which banks must analyse their applications.
Through our meetings, we share this advice, which is often common sense advice to help our customers secure their financial situation. It's never too early to consider a project.
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