Real estate loan brokers caught up in a free-falling market

“Everyone went through the year 2023 as a boat captain on raging seas,” Ludovic Huzieux, co-founder of the Artémis brokerage network, tells AFP.

“There are a lot of brokers who are in difficulty today,” says Côme Robet, president of the professional association CNCEF Crédit.

Orias, the association responsible for identifying and approving these professionals, had 6.300 brokers in banking operations and payment services (COBSP) at the end of last year, compared to 6.950 at the start of 2023.

“Many (...) have gone to do something else,” notes Mr. Robet.

The tide turned quickly for these business providers, after a prosperous period boosted by low rates. The banks, competing for years on home loans - a flagship product - did not hesitate to pay them commissions, around 1% of the amount of the loan.

Enough to multiply the salary of an employed broker, around the minimum wage, by 2 to 4 times with the variable, according to several testimonies. For freelancers, who do not depend on larger networks, this commission is vital.

But the European Central Bank (ECB) signaled the end of the game in the summer of 2022 by increasing its key rates, immediately passed on in their rates by the banks, concerned about their margins.

Adapt

Some banks "have completely stopped mortgage lending, others have only reserved it for their customers", testifies an online bank manager.

So much so that the Banque de France recently reminded the profession of its role: financing the economy. The institution is working on an appeal mechanism for rejected but potentially solvent files.

At the same time, loan applicants realized that one percentage point more on their credit could increase the cost of a loan, over a period of 20 or 25 years, by several tens of thousands of euros. euros.

Many of them preferred to postpone their purchase plans, hoping to make up a little on a sale price which is still struggling to fall.

The French real estate market has therefore logically recorded a “historic fall” of 22% in sales in 2023, according to data made public on Tuesday by the National Real Estate Federation (Fnaim).

At the same time, the average broker commission approached zero for the few banks that still worked with them.

“We are at a crossroads, the profession is changing,” believes Mr. Robet, who is campaigning for the advisory role of the broker, not just “I take your file and I take it to the bank”.

According to him, brokerage professionals have an interest in diversifying towards support for other clienteles, such as business leaders, towards insurance or even wealth advice.

Caricature

Worried about their future, some brokers have stepped up their efforts, carefully sparing the banking establishments on which they depend financially.

The professional union UIC, for example, organized two demonstrations in front of the premises of the Banque de France in Paris, bringing together around a hundred people in September 2022 - and only around fifteen in November 2023.

Several of their colleagues told AFP of their discomfort with the method used. Wearing berets evoking Abbé Pierre, the demonstrators denounced the denial of the Bank of France, in particular on the usury rate, the maximum rate applied to real estate loans to limit over-indebtedness.

They also attacked the rules of the High Council for Financial Stability (HCSF, caricatured as "Collective hallucination sacrificing the French") which cap, among other things, the rate of effort, that is to say the total amount of expenditure linked to housing compared to income.

These safeguards aim to limit borrower defaults, a rare event that will have repercussions on the lending bank and the insurer, but not the broker.