Real estate: the number of loans granted plummeted in the third quarter

Unheard of since the 2008 financial crisis: The number of home loans was cut by a third between June and September to reach a level well below the level of the first lock-in, the Credit Housing CSA Observatory reports on Tuesday, October 18, and an analysis echoed by Le Parisien, Thursday, October 20. 27.7% fewer loans were granted in the third quarter of 2022 compared to the third quarter of 2021. “Such a decrease had not been seen since the fall of 2008, when the international financial crisis was at its peak. It was even more pronounced than that observed during the first foreclosure”, explains the Observatory, which issues almost every third mortgage in France.

How to explain this decrease in the production of credits, which has already been announced by many experts in the sector? First, households can no longer spend more than 35% of their net income on their monthly loan payments since 1 January. Mortgage rates have also increased by an average of 0.2 to 0.5 points over the past thirty days, broker Empruntis reported in early October. But it is above all the usurious rate, the maximum “all-inclusive” rate that banks are prohibited from lending beyond, that has complicated the situation. Because once the loan interest, borrower insurance, administration and guarantee fees are integrated, a household can very quickly exceed this authorized limit – all in a context of purchasing power eroded by inflation.

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A bank offer that went into contract

With “an inappropriate attrition rate in connection with the increase in the ECB’s main refinancing rate, the bank supply has fallen”, the Observatory sums up. The credit machine is clearly stuck with major consequences for the economy: Because fewer loans lead to fewer transactions, which in itself has an impact on part of the construction and client activity. Behind the scenes, professionals in the sector had already sounded the alarm more than once.

The rate of wear must be written up, say the brokers

“We are heading for a credit collapse by the end of the year”, feared Maël Bernier, spokesman for Meilleurtaux.com, questioned by Capital at the beginning of the third quarter. Same story on the side of the broker Cafpi. Three months later, the conclusion is clear: “We would have liked to be wrong, but it is clear that the figures from the Credit Housing Observatory give us reason”, stings Maël Bernier, questioned by our colleagues from Paris. “With the rate of attrition, many borrowers are left on the floor.”

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Banque de France had chosen to increase the wear rate since October 1 from 2.57% to 3.05% for loans of 20 years and more. Very inadequate for brokers, who are calling for the latter to be changed again to encourage banks to lend again and loosen the noose that has hit the sector. The next rate revaluation is not planned until January 2023.

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