Monthly production of real estate loans stagnates in October according to the Banque de France

Has the decline in real estate loan volumes reached its lowest point? The production recorded by the Bank of France in October, at 9,2 billion euros, is in any case identical to that of September, it indicated on Tuesday December 5.

Although this monthly volume is at its lowest in more than 7 years, the total outstanding mortgage loans remain significant: nearly 1.300 billion euros, twice as much as 15 years ago.

The tide has turned quickly on the real estate loan market, after prosperous months above 20 billion euros in monthly production, as in October 2020, May, June and July 2021 or even April and May 2022, driven by a catch-up effect after periods of confinement for 2020 and 2021 and the desire of borrowers in 2022 to benefit from attractive rates before the announced rise.

Households are now less inclined to borrow because of the increase in rates initiated by the European Central Bank (ECB) last year and passed on by banks in their commercial policy.

The average interest rate excluding fees and insurance, which was below 1,1% until March 2022, has jumped in the space of 18 months: in October it was 3,87% for new loans excluding renegotiations. , according to the Banque de France, and is even expected in November at 4,04%.

All fees included, the average rate charged by banks between September and November 2023 for a loan over 20 years was 4,58%, according to the same source.

For example, when the rate of a loan of 150.000 euros over 20 years reaches 4,58%, the interest over the duration of the loan represents approximately 80.000 euros, or more than half of the principal.

However, at the same time, wages are increasing little and real estate prices are only adjusting slightly downward. Result: demand falls.

In this gloomy context, the Ministry of the Economy and the Bank of France are working to revive the real estate loan market.

They decided on Monday to marginally adjust the rules governing real estate credit, decided within the framework of the High Financial Stability Council (HCSF).

The HCSF also declared itself in favor of a Place agreement for a second examination of refused real estate loan files, an idea launched by the governor on November 17 and taken up by Bruno Le Maire.

Illustrative image of the article via Depositphotos.com.