Increase in the production of real estate loans in the 2nd quarter of 2024

In the 2nd quarter of 2024, the average rate of credits in the competitive sector (excluding insurance and cost of collateral) stood at 3,73% (3,68% for new construction and 3,74% for accession in the old).

Since the downward shift in December 2023, the average rate has fallen regularly. The drop was seen again in June, where the average rate returned to its level of July 2023, i.e. 3.66%.

"The fall in property loan rates alone could not trigger a strong and rapid recovery in the market, the increase in the required personal contribution having had a significant depressive effect on demand. Only a strategy of revitalizing the property markets and credits such as that deployed by the banks could reverse the recessive dynamic at work", however assures the Observatory.

Access to the market, however, remains difficult due to "the tightening of access to credit both for modest borrowers with little personal contribution, and for wealthier households who do not have sufficient contribution in relation to the prices charged" , underlines the observatory.

Indeed, the rise in the cost of financed operations (and the prices of existing housing) which has been increasing since February 2024 "clearly attenuates the effectiveness of the rate and duration effects", despite a further increase in the average personal contribution. .

In June 2024, the borrowing capacity of households measured by this annuity was still 11,5% lower than its level in December 2022 (or even 20,0% compared to December 2021): a household which could borrow 100.000 euros at the end of 2022, can only borrow 88.500 euros in June 2024 (80.000 with reference to December 2021).

In the 2nd quarter of 2024, the average duration of loans granted was 246 months. The duration of credits granted remains at high levels because “banks can thus amplify the effect of falling rates on the solvency of demand”.

The borrower solvency indicator is slowly recovering despite the resuming rise in prices. But we must see "the return to the old market of wealthier households, who buy after resale and who can more easily satisfy the constraints introduced with the capping of the borrowers' effort rate".

Illustrative image of the article via Depositphotos.com.