The granting of new real estate loans fell again in November 2023, to 8.7 billion euros, the Banque de France indicated on Monday, which expects the trend to continue in December.
Monthly production of home loans – excluding renegotiations – had stagnated at the already low level of 9.2 billion euros in September and October, with the institution then counting on a normalization of the market.
She removed this notion from her analysis and is now counting on a further decline in December, 8.6 billion, which would then be a low point since January 2015.
The total outstanding amount of real estate loans, however, remains significant at nearly 1,300 billion euros, twice as much as fifteen years ago.
The tide has turned on the real estate loan market, after prosperous months above 20 billion euros in monthly loan production, as in October 2020, May, June and July 2021 or even April and May 2022, driven by a catch-up effect after periods of confinement and by the desire of borrowers in 2022 to benefit from still attractive rates before the announced increase.
Households have since become less inclined to borrow due to the increase in rates initiated by the European Central Bank (ECB) in mid-2022, passed on by the banks.
The average interest rate excluding fees and insurance, which fluctuated below 1.1% until March 2022, jumped: in November it was 3.99% for new loans excluding renegotiations, according to the Banque de France, and is even estimated in December at 4.11%.
The long period of sharp increases in real estate loan rates seems to be coming to an end, nevertheless believes the broker Cafpi, who is even seeing surprise drops from banks which are starting to win over new customers.
The rise in interest rates and the reluctance of banks to grant new loans while wages are increasing little and real estate prices have fallen only slightly have contributed to the drop in demand.
The French are on average in debt for 23 years when they buy their main residence, with first-time buyers – who represent half of borrowers – being in debt for seven months more, according to the Banque de France.