2024-04-24 05:22:58
They are not regarding to forget their “stress”: facing a seized property market to sell their property, Nicolas Dufloux and his wife thought they would lose everything when their bridging loan expired, this super bank overdraft that allows them to buy a home before they was sold.
The real estate market: a couple was saved in Lille in France (illustrative image).
imago pictures/Andia
It was last year, this 31-year-old logistics manager and his wife, an employment counselor, without children planned to sell their apartment in the Lille metropolis for a house in Marcq-en-Barœul.
To facilitate their project, they took out a bridging loan. In this mechanism, the bank advances a percentage of the estimated price of the property to be sold, often around 70%, to finance the purchase of a new property. After the purchase, the borrower has up to two years to sell their old home and pay it back.
In 2023, this financing method represented 7.1% of home loan applications, according to the Prudential Control and Resolution Authority (ACPR), which oversees banks and insurance companies. In July, the share even reached 8%, a record for at least 11 years.
Worry
But now the months pass and the Lille couple become disillusioned. Their apartment, which was put up for sale for more than 200,000 euros, found no buyer, and following a revaluation, the price was adjusted down.
The worry lasts until the holidays, when the couple learn it has finally sold for €185,000 – three months before their bridging loan expires.
“The announcement of the sale of our apartment was our Christmas present,” recalls Nicolas Dufloux who does not forget the “moments of stress” before this sale, with the risk of having to leave his new house and sell to repay the construction loan. which has expired.
From his experience, this Lille resident can only advise candidates to “observe carefully how the market develops”, “have a good valuation of your property”, and “make sure it covers the new purchase”.
“Other buyers”
The rates for bridging loans have increased in parallel with those for traditional property loans, and now exceed 5% on average according to the Banque de France in March 2024.
The Lille branch of NDFI Crédit, the brokerage branch of Square Habitat, the Crédit Agricole real estate brokerage network, still has around ten open.
The profile of these “second buyers” has not changed – they are usually between 35 and 50 years old and “want to change houses, buy better, bigger”, explains Charlotte Baillet, director of this agency.
On the other hand, another source of stress for sellers, the banks are more demanding when it comes to providing bridging loans, especially since the market has “turned” in the last year and a half.
Just following Covid, “we were in a market with sellers who were the masters of the game”, with inquiries pouring in “all over the sector of Touquet, Cote d’Opale, Wimereux, etc. Parisians and Belgians bought without even visiting.”
A buyer’s market
Today “we are in a buyer’s market, there are many sellers”, and sales take longer. When the loan is refused, the disappointed candidates accuse the banks of being “too cautious”, laments a bank manager from the Lille metropolis interviewed by AFP on condition of anonymity.
“If we didn’t lend more money, we’d be dead,” he recalls, stressing that bankers also fear “embarrassing our customers.”
According to the criteria of the High Financial Stability Council (HCSF), the borrowers’ input rate, i.e. the ratio between loan costs and income, must not exceed 35%.
For the borrower, “there must be money left over for small pleasures, excursions, holidays. There is no point in being in your dream house if you have to eat pasta every day, emphasizes this banker.
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