The debt ratio that cannot be exceeded has been 35% since January 2022. Illustration photo. (Geralt/Pixabay)
According to Meilleurtaux, a third of mortgage loan applications would be rejected because the loan applied for represents too much debt. The explosion in interest rates since the beginning of 2022 has greatly reduced the borrowing capacity of households and caused many cases to pass beyond the maximum debt ratio.
Getting a home loan has proven increasingly difficult for many households since the start of 2022. According to a recent survey by the broker Meilleurtaux relayed by
Le Figaro Property
, almost a third (30%) of the cases are now inadmissible. The credit requested by the plaintiffs constitutes an excessive debt
That is 9 points more than in January 2021.
Falling borrowing capacity
January 2022, this maximum debt ratio is 35%. This means that the monthly benefits to be paid must not exceed 35% of the household income including insurance. However, 20% of the files, the strongest, may deviate from this rule and lead to a higher debt ratio.
Specifically, the share of files with a debt ratio of less than or equal to 35%, according to Meilleurtaux, represents only 58% of the whole, against 72% two years ago. The phenomenon is explained by the fact that the interest rate has exploded since the beginning of the year. For a loan over 20 years, the latter fell from 1.1% in January 2022 to 2.3% in October 2022. This mechanically reduced the borrowing capacity of households and correspondingly reduced the number of loans accepted.
A dead property market
A couple earning €4,000 net per month with insurance at 0.34% would thus have lost €30,000 in borrowing capacity over 20 years. At the maximum debt ratio, the latter is now estimated at 255,000 euros against 285,000 euros at the beginning of the year. This factor is also the reason for a drop in credit demand, with 35% fewer cases submitted to Meilleurtaux between March and October.
Especially since the property market seems to be at a standstill at the same time. Many 40-year-olds who wanted to buy bigger would have postponed their project because of these rates. This is why, for Maël Bernier de Meilleurtaux,
“forced sales will make up the majority of the market by 2023”