2023-04-30 07:43:02
The banks are pointing the finger at the drop in demand, Elisabeth Borne wants to “solicit” banking establishments more, the standards that govern the market are considered too strict by many… The collapse in the production of real estate loans is indisputable, the solutions are less so.
The figures speak for themselves: the number of loans granted to plunge by more than 40% over the first three months of the year according to the observatory Credit Logement/CSA. The collapse of credit production is one of the players in this housing crisis which worries France to the point that Prime Minister Elisabeth Borne has made it one of her priority projects for the next 100 days.
“The big national banks have drastically reduced” their offers, according to several brokers, while for the banks, it is more the demand that penalizes their production of credits.
So what’s really going on in the market? Is it the households that no longer want to buy, the banks that no longer want to lend, the rules that are too strict? Overview of a sector that is doing badly.
Real estate credit, the lights are red?
The fall in real estate loans has been a reality for several months in the French landscape. When the European Central Bank (ECB), last year, decided to increase its interest rates to regulate inflation, one of its aims was therefore to slow down the granting of loans to households. Successful operation.
Today, borrowing money is much more expensive than yesterday. The average mortgage rate has increased at the rate of the ECB’s tightening and is now three times higher than a year ago: it exceeded 3% in April when it was just over 1% early 2022, according to Crédit Logement/CSA data.
That said, “the anomaly was rather to be able to borrow at 1%,” notes Olivier Lendrevie, president of the broker Cafpi. The rise in interest rates is a “healthy and desired mechanism”, he adds, but at the same time real estate prices must gradually fall, which should take several more months according to him.
These rates are also capped by the usury rate, ie the maximum rate at which banks have the right to lend. Although it will drop to 4.52% on May 1, it remains low, very low, compared to other countries. In Belgium, for example, it is 10%. For the banks, this means that their mortgage business is not profitable. “The majority of loans [que nous octroyons] are made at negative margin,” a national bank executive told BFM Business.
“I can not understand”
The real estate market is highly regulated, too much for many. Its legislator, the High Council for Financial Stability (HCSF), tightened in 2022 the obligations to which banks must adhere. Among these, a debt ratio of 35% for households and a maximum duration of loans limited to 25 years, with some possible flexibility.
“I can’t understand the problem they wanted to solve” is surprised Olivier Lendrevie who is not kind to these rules: “What is dramatic in France is to have added regulatory distortions which make banks unwilling or unable to lend.”
The banks agree.
Elisabeth Borne wants to “solicit” the banks
“We haven’t changed our strategy since the second quarter of 2022,” a major bank executive told us, adding that they had “reduced their loan offers before.”
For him, only one HCSF component really needs to be relaxed: the one that frames rental investments. “We have to say no to customers who want to invest in rental property,” he said before adding that the HCSF is “not at all” considering a review.
A mutual bank tells us that it is the ceiling on the debt ratio that is blocking although he admits that raising it would “accelerate the files a little” in carry-over but would not dramatically change the trend. . The HCSF criteria, “it’s an easy way to get around,” he says, while on rates or prices, they can’t do anything.
The Banque de France, one of the central members of the HCSF, remains convinced of the validity of the rules in place which protect once morest over-indebtedness, according to its governor. “The mortgage remains in France the most abundant and the cheapest in Europe,” insists the institution which did not answer the question of BFM Business on a possible relaxation to come.
The banks do not consider themselves responsible for the situation, but it is to them that Prime Minister Elisabeth Borne wants to appeal to unblock it: “We are going to ask the banks to improve access to credit,” said – she said when she presented her roadmap earlier in the week.
At the microphone of BFM Business on Friday morning, Housing Minister Olivier Klein also said that “banks today are cautious, too cautious.”
“No one cares regarding you”
One certainty, the effects are there: “Today, I spend my time telling clients ‘nobody is interested in you’” observes Bérengère Dubus, broker and general secretary of the Union of credit intermediaries. This is an unprecedented situation, she says, and first-time buyers are the most affected.
According to the broker, many large banks now only lend to their customers and even then only a part. Mutual banks – which represent the vast majority of loans granted – or national banks, they have all reduced although non-mutual banks have slowed down more, she specifies.
Only Axa would have completely and temporarily stopped to offer home loans, according to information from the magazine Challenges which dates from the beginning of April.
If the banks are called upon to make an effort, for them it is above all the demand that must start once more to bring back the sun.
On the household side, it’s waiting
“There is a demand problem: credit rates have increased so much that people can no longer buy,” says Sandrine Allonier, director of studies at Vousfinancer.
The decline is “really significant” with customers “who will give up their project” insists the framework of a large bank. The level of property prices coupled with high borrowing rates is paralyzing the market.
So there are a lot of postponements and abandonments in a normally transaction-heavy period.
“The real estate market is hanging on to loans,” says Thomas Lefebvre, scientific director of MeilleursAgents on BFM Business. real estate fell 0.5%, he said.
Between now and early 2022, “to keep the same real estate purchasing power, prices would have to adjust by more than 20%,” notes Thomas Lefebvre. “Sellers are still clinging to valuations from a year ago, two years ago,” he continued.
“It is certain that the market will continue on its downward trend in the coming months,” he assures us.
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