Real estate loans: end of the fall?

chart of the week

One week to the day before a long-awaited decision by the High Council for Financial Stability (HCSF) on the criteria for access to mortgage loans, the Banque de France is publishing this Tuesday, June 6 figures which will not fail to feed the debate on whether or not the rules need to be relaxed: statistics on new home loans.

In April and May 2023, respectively 12.6 billion euros (provisional data) and 12.2 billion euros (advanced estimates) were granted to individuals by banks, renegotiations excluded. That is approximately as much as the two previous months (12.2 billion in February as in March 2023).

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Levels certainly in free fall if we compare them to those of the same months of 2022. Over the first five months of the year, the loans granted are in fact down by around 37% (99 billion euros in 2022, 63 billion in 2023).

The fall even reaches 41% if we focus on the last three months (37 billion between March and May 2023, against 63 billion between March and May 2022). But “the monthly production of housing loans is stabilizing”notes the institution in a press release.

moving season

The end of the fall that began in early summer 2022? “We don’t have a crystal ball, but this stabilization is now observed over four months. In addition, spring and the beginning of summer being traditionally favorable to moves, and therefore to loan applications, this trend could continue, or even change, at least temporarily, into a slight increase in loan volumes.analyzes Marie-Laure Barut-Etherington, Deputy Director General of the Statistics and Studies Department of the Banque de France.

It specifies that over the past ten years, the average monthly production of home loans has been nearly 14 billion euros (excluding renegotiations), but that these ten years include “a period of exceptionally low interest rates which caused the number of real estate transactions to take off. Overall monthly production, including renegotiations, before this period of extremely favorable rates, was on average less than 10 billion euros, compared to the current 15 billion..

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In his view, it is difficult to measure the impact of the monthly payment for fixing the wear rate – the maximum rate at which banks are authorized to lend – on this stabilization of activity. “What is certain is that the measure, proposed by the Banque de France and accepted by Bercy, made it possible to smooth production, to avoid the jolts within the same quarter, observed at the end of 2022”she explains.

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