The governor of the Bank of France and president of the banking watchdog, the ACPR, spoke for the first time of the widespread feeling that the refusal rate of banks would increase. If this were the case, he judges that this would not be justified and outlines solutions.
THE bank refusal rate, equal risk, should not increase. Let us be clear, this rate is not precisely measured, and this undoubtedly justifies a lot of interpretations and suspicions. There is a diffuse feeling that he has risen, noted the governor while opening the annual conference of the Prudential Control and Resolution Authority (ACPR). The governor does not see no justification for thatbecause the profitability and liquidity of banks should not be a brake according to him.
The refusal rate of banks, equal risk, should not increase
It appears necessary and in the collective interest to better monitor these refusal rates, while the granting of real estate loans fell to a low point of 9.2 billion euros in September, levels before the implementation of an ultra-accommodating monetary policy in 2015.
His proposal: open an amicable procedure for apparently solvent real estate loans that would have resulted in refusal
Franois Villeroy de Galhau invites banks and public authorities to consider opening an amicable procedure to deal with potential refusals of real estate loans: I believe it would be in the common interest to reflect, between banking players and public authoritiesand temporarily for the current phase of the cycle, open a amicable procedure: this would target apparently solvent real estate loans which would have given rise to refusalas exists for business credit, he declared during his opening speech at the ACPR conference.
Real estate loan rate barometer – November 2023
Franais Villeroy de Galhau once again defends HCSF standards
The French financial sector, strengthened by the rise in rates, must ensure healthy financing of the French economy and in particular continue to grant real estate loans, said the governor of the Bank of France, Franois Villeroy de Galhau, on Friday.
The governor of the Bank of France also defended the standards of the High Council for Financial Stability (HCSF) – criticized by bankers and real estate loan brokers – which limit the duration of loans and their weight in relation to household income. , recalling that they fulfilled (their) mission to stem excessive debt and that there was room for flexibility.
Using flexibilities more, rather than contesting them, is the best way for banks to produce more credits…
His main argument, to defend the standards of the HCSF? Banks already have the possibility of deviating from the rules… and do not do so enough: Its standards are not harsh today, declared the governor of the Bank of France, since the banks have the capacity to produce more on all the flexibilities offered by the HCSF decision within the 20% margin [marge de flexibilit pour laquelle les banques ne sont pas tenues de respecter la limite de 25 ans et le taux d’endettement de 35% maxmum, NDLR]. (…) In particular, the flexibility of 6% on rental investment is only used at 2.6%. Making greater use of flexibilities, rather than contesting them, is the best way for banks to produce more credits… provided of course that we maintain the volume of production of “compliant” credits: we will ensure this, so that credits longer and riskier credits do not replace safer credits.
In an email sent to AFP, the French Banking Federation (FBF) recalls that for several months, household demand for credit has fallen significantly, under the effect of the rise in rates (…), while the prices of real estate and housing supply were stable. The banking federation affirms that banking advisors always listen to their clients to find solutions, and grant responsible loans, in this complex and constrained framework, adding that the profession of course works in conjunction with public authorities to offer solutions. continued improvements, particularly in this important area for households.
François Villeroy de Galhau, however, pointed out that the HCSF will study possible new technical adjustmentsprovided that they do not lead to an increase in the risk of over-indebtedness.
Real estate credit: for relaxation, borrowers will still have to wait
Solvency strengthens French banks
More generally, the governor of the Bank of France and president of the ACPR (Prudential Control and Resolution Authority), a banking and insurance watchdog, praised the great resilience of the French financial sector, despite an exceptional level of uncertainty. Even if the importance of fixed rates in real estate loans in France slows down the process for French banks, the increase in interest rates and the stabilization of the Livret A rate have strengthened the profitability and solvency of French banks. Insurers also benefited from the rise in rates, he noted.