be prepared, borrowing could quickly become more complicated

Despite the rise in interest rates, French households have borrowed heavily in 2022 to finance their consumption in the face of inflation. At the risk, for some, of suffering a deterioration in their financial health. Now, credit institutions are faced with a choice: leave the tap open, or restrict the flow to limit the risk of bad debt.

This is what is called an excellent half-year… From January to June 2022, the activity of establishments specializing in consumer credit experienced double digit growth. According to the ASF (1), the amount of new loan agreements (excluding LOA) increased by 11.7% compared to the same period of 2021. Not badly, when we remember that since March and the outbreak of the war in Ukraine, the average rates practices have increased markedly. After a plateau in the spring, they started to rise again this summer. They are henceforth nearly half a point better than last year.

In other words, borrow to buy a car, redecorate your decor or your kitchen or simply finance your desires price this year a little more expensive than in 2021 the same time. In early September, the monthly payment to repay a loan of 10,000 euros over 48 months at the average rate in force, all personal loans combined, reached 225.95 euros. A year earlier, it would have been 224.26 euros. That is a difference, reasonable, of 1.68 euro, representing a monthly payment increase of 0.7%.

Each month, MoneyVox offers you, in partnership with the consumer credit comparator, its rate barometer. It presents the average rates charged by some thirty banks, insurance companies and credit organisations, depending on the type of project, the amount of financing and the desired repayment period.

The rate barometer – September 2022
(new and used)
Over 12 monthsUp to 36 monthsUp to 60 monthsUp to 84 months
Up to 5000 euros
excellent rate2.24%3.29%3.92%4.63%
Average rate7.35%7.41%6.46%6.21%
Up to 15000 euros
excellent rate0.90%2.37%3.00%3.43%
Average rate2.83%3.79%4.13%4.48%
Up to 40000 euros
excellent rate0.87%2.32%2.93%3.25%
Average rate2.55%3.56%3.94%4.35%
WorksOver 12 monthsUp to 36 monthsUp to 60 monthsUp to 84 months
Up to 5000 euros
excellent rate3.42%3.71%4.28%4.23%
Average rate7.52%7.59%6.59%6.23%
Up to 15000 euros
excellent rate0.90%2.33%2.90%3.15%
Average rate2.82%3.72%4.05%4.38%
Up to 40000 euros
excellent rate0.82%2.18%2.79%3.01%
Average rate2.49%3.46%3.81%4.22%
Other loans
Over 12 monthsUp to 36 monthsUp to 60 monthsUp to 84 months
Up to 5000 euros
excellent rate2.72%3.67%4.48%5.02%
Average rate7.83%7.94%6.99%6.97%
Up to 15000 euros
excellent rate0.90%2.37%3.05%3.68%
Average rate2.98%4.03%4.37%4.63%
Up to 40000 euros
excellent rate0.92%2.41%3.07%3.58%
Average rate2.62%3.77%4.16%4.48%

Rates at the beginning of September 2022. Data provided by the consumer credit comparator

The personal cash loan, a new engine of growth

On paper, however, the situation seems unfavorable to consumer credit. With rising inflation, households have had rather tendency to limit their expensesas shown by the decline in consumption in the 1st half (-1.3% from January to March, -0.2% from April to June according to INSEE).

This growth is all the more atypical in that it is not driven by its traditional engine: the automobile, notes Sergio Monteiro, founder of the consumer credit comparator Manufacturers’ difficulties in obtaining electronic components are leading to shortages of new vehicles. As a result, the credits allocated to this type of purchase fell by almost 18%, over one year, in the 1st half, according to the ASF (2). Rental with option to purchase (LOA), for its part, is progressing, but slightly (+6%), far from the growth figures recorded in recent years.

Signs of strain on household purchasing power

The current market driver is different: it is personal cash loans. Since the beginning of the year, these have increased by nearly 17%, even exceeding their pre-pandemic level. A side effect of high inflation, says Sergio Monteiro: This is a sign of pressure on the purchasing power of households. They borrow to cover expenses (health, education, repairs, bills, etc.) that they could previously have financed without resorting to credit. Revolving credit, sometimes used to finance difficult month-ends, is also in great shape (+18.3% in the 1st half compared to 2021, +7.4% compared to 2029).

Another sign shows, more explicitly, that the French budget is beginning to be suffocated by the rise in prices. Over the first 8 months of the year, the number of French people registered with the FICP (1) the result of a payment incident has increased by 25% compared to 2021 and is approaching pre-Covid levels.

Overdraft, consumer credit, over-indebtedness… A fairly tough crisis is looming for the French

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Open or close the tap, banks face a choice

Confronts a increased risk that they have to lend moneybanks therefore have a choice to make: whether or not to maintain the accessibility of credit, analyzes Sergio Monteiro.

To continue lending without risking their clients sliding into bad debt, it has an adjustment variable: increase in repayment terms. With inflation at 6%, everything costs more, and households have to borrow more to access the coveted property. To limit the weight of the monthly payment on their budgets, already under pressure, the banks can give them more time to repay. The problem is that this solution has already been widely used in recent months. Personal loans repayable over 84 months have become common today, whereas the norm a few years ago was 60 or 72 months maximum, notes the spokesperson for Clearly, the banks no longer have much leeway in this area.

We’re entering uncharted territory

The other lever, to limit the risk of repayment defaults, consists of tighten the conditions for granting. In other words, to restrict access to credit for the most vulnerable households. This is the path taken by some credit institutions. One of them, among the best known, recently warned its business partners that it was going to be more demanding on the guarantees provided by borrowers, anticipating a drop in its production of new loans of around 10%.

Does this example announce a more general movement? Hard to say today. In an increasingly uncertain macroeconomic context, we are entering uncharted territory, concludes Sergio Monteiro.

Compare the current rates of personal credit offers

(1) The French association of financial companies brings together all the specialized establishments. In terms of consumer credit (revolving credit, allocated credit, personal loans, rental with option to purchase), its members represent nearly 50% of the outstanding amount of all credit institutions (and the majority of credit transactions). revolving loans). (2) National file of incidents of repayment of loans to individuals, kept by the Banque de France

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