Real estate credit still recovering in August

The production of housing loans excluding renegotiations amounted to 9,3 billion, compared to 11,3 billion in July (-17,7% over one month) and 9,9 billion in August 2023 (-6,1% over one year).

The Banque de France wants to see in this volume "a clear recovery trend" since the spring trough, even if it is the worst month of August for 10 years.

The average interest rate on these new loans is very slightly more favorable for borrowers, according to the same source, going from 3,64% in July to 3,59% in August - excluding fees and insurance.

All costs included, rates reached 4,39% for a term of twenty years or more in the third quarter, according to the Banque de France.

This high level reached in just a few quarters represented a real shock for households' real estate purchasing power: it was still two and a half times lower in the first quarter of 2022, at 1,80%.

Some bankers have been struggling since the start of the school year to revive a moribund market, where buyers, stuck between still high rates and prices that are not falling or are falling only slightly, are rare.

For those seeking a loan, "it's time to go and see your banker," encouraged the governor of the Bank of France, François Villeroy de Galhau, on France 2 at the end of September.

"It's even time to put the banks in competition to get the best possible rate," he continued.

"We want to lend"

Home loans are crucial for banks: they are one of the rare products that can trigger a change of banking institution for an individual or household.

It is key to their retail business since with the new credit often comes the opening of a current account, possible savings products, insurance, etc.

Banks are returning to this terrain all the more easily as they have more or less regained financial balance after two years of negative margins, according to data published this summer by the Prudential Supervision and Resolution Authority (ACPR).

In order not to increase their losses, some establishments had virtually withdrawn from the market last year.

They were even asked to set up a system for reviewing refused property loans, which was ultimately very little used.

"Imagining that banks do not want to lend is stupid," BPCE CEO Nicolas Namias said last Thursday during a conference organized by the S&P rating agency.

"We want to lend," he continued.

Borrower insurance

Income from real estate credit is not only played out in the credit itself for French banking establishments, but also in the borrower insurance often taken out with their subsidiary.

The margin on this product, covering the borrower in the event of death or disability for example, is indeed very significant.

The European insurance regulator, Eiopa, highlighted at the end of September 2022 its "unusually high profitability" on a continental scale.

The bancassurer model, which is dominant in France, can also "lead to the emergence of potential conflicts of interest" between its subsidiaries, he continued.

Banks, which are fighting among themselves over rates, also use borrower insurance as a sales argument.

The mutual group bringing together the Banques Populaires and the Caisses d'Epargne, BPCE, for example, announced last Thursday that its first-time buyer customers under the age of 36 will be able to "defer the repayment of the capital by up to 10 to 20% of the total amount financed."

The bank, in collaboration with CNP Assurances, is also investing in the field of values ​​by opening the previous week the possibility for parents of sick or disabled children to cover part of their monthly payments for more than two years.

At the same time, BNP Paribas announced at the beginning of September two new guarantees, "parental presence" and "close carer", intended to "extend the conditions for compensation for work stoppage to all close carers".

Illustrative image of the article via Depositphotos.com.