Bad first half for real estate loans

New real estate loans fell to their lowest level in 10 years in the first half of the year, according to data published Monday by the Banque de France, in a market where buyers, stuck between still high rates and prices which are not falling or only slightly, are becoming rare.

The total amount of new housing loans excluding renegotiations amounted to 47,3 billion euros between January and June, down 36% year-on-year and the lowest since 2014.

The average interest rate for these new loans is, however, a little more favorable to borrowers, according to the same source, going from 4,17% in January to 3,70% in June.

These rates exclude fees and insurance. All costs included, rates rose from 4,79% to 4,62% from the first to the second quarter for a period of twenty years or more, according to the Banque de France.

This is a real shock to the real estate purchasing power of households: this rate was still two and a half times lower in the first quarter of 2022, at 1,80%.

If this slight downward movement and calls from the banks are normally likely to boost the market, property candidates are not rushing to the gate.

The main obstacle is shared by all market players: a still high property price.

The political context of June added a degree of uncertainty and wait-and-see attitude for households.

In the second quarter, "the market environment was sluggish" for real estate loans, commented last Thursday the financial director of Société Générale Claire Dumas, "due to a more uncertain and wait-and-see environment, particularly after the dissolution" of the 'National Assembly.

Banks and brokers also consider that the market is hampered by certain rules decreed by the High Financial Stability Council (HCSF), which regulates, among other things, the conditions for granting real estate credit, particularly in terms of rental investment.

The signs of recovery are timid: the production of new housing loans excluding renegotiations reached 8,6 billion euros in June, the second worst month since the start of the year, behind April.

They could fade in July and August, generally quiet months for real estate transactions.

The Bank of France, however, sees a “gradual recovery”, but several stabilizations mentioned for April 2023 and December 2023 ultimately did not hold.

Illustrative image of the article via Depositphotos.com.