The governor of the Bank of France François Villeroy de Galhau called on Wednesday for “caution” regarding loans repayable in fine, which the Minister of Ecological Transition Christophe Béchu wishes to relaunch to stem the real estate crisis.
Very little marketed today by banking establishments in France, these types of credit dissociate the payment of interest and the repayment of capital.
In practice, the borrower pays the interest on the loan (and insurance) each month but only repays the capital once, when the loan matures.
These loans are “more risky since they extend the duration of household debt; they are therefore generally more expensive, and banks generally ask for more guarantees,” Mr. Villeroy de Galhau underlined on Wednesday in a message on the professional social network LinkedIn.
Drawing on the Swiss example, Mr. Béchu has highlighted several times in recent days final credits, as well as mortgage credits (which require the candidate for the loan to pledge real estate in order to provide an additional guarantee to the bank). In his proposal, only part of the borrowed amount, 20 or 30%, would ultimately be repaid.
The minister’s objective is to revive the real estate market, which is in free fall: sales have in fact fallen by 22% in 2023, according to the National Real Estate Federation (Fnaim).
This goal is shared by the Banque de France but its means of achieving it differ. It is rather counting on the stabilization or even the fall of prices when Mr. Béchu’s proposal allows “to buy a more expensive property”, according to a clarification given on Tuesday by his office.
Banking establishments had already shared their serious doubts about the minister’s idea at the start of the week, questioning via the French Banking Federation (FBF) the Swiss parallel and putting forward the high price for the borrower.
They will have the opportunity to discuss it with the minister at the end of the month, according to Mr. Béchu.