The moment of trend reversal seems to have arrived in the credit market. After several months of decline, the volume of new home loans increased in April, according to data from the Banque de France.
The total amount of new home loans, excluding renegotiations, reached €8.9 billion, up almost 30% on March to €6.9 billion.
” This is the first significant trend reversal since spring 2022 and the increase in rates. According to several leading indicators, this reversal should continue in May », indicated the Bank of France on Thursday in a press release.
Falling credit interest rates
As a reminder, real estate loans in France have seen a steep decline since the start of 2022, linked to the gradual increase in interest rates peaking at 4.5% (excluding insurance) in December 2023, according to Empruntis. The cost of credit, which is significant for borrowers, weighs on household purchasing power in real estate, even as property prices force buyers to borrow significant amounts.
In recent months, however, the average interest rate on new loans has fallen significantly: it stood at 3.89% in April, down 0.63 percentage points compared to December. Banking institutions strive (…) to revitalize the mortgage market », analysts from the CSA/Crédit Logement Observatory, another data provider on this market, indicated on April 17. According to them, the average credit rate was 3.73% in May. “75% of borrowers today benefit from terms that we would not have dreamed of just a few months ago”described Michel Mouillart, university professor and scientific adviser to the Crédit Logement Observatory, when the study was published.
” As banks’ funding conditions stabilized with the end of the rise in policy rates, they were able to recover margins and therefore began lending again. », explained to La Tribune, Cécile Roquelaure, Head of Studies at Empruntis, Thursday. An appetite for lending activity which has resulted in greater competition between banks and thus increasingly competitive interest rates – even if it means cutting into their margins – to win customers.
If prices are still far from those shown before the real estate crisis, ” today there are significant negotiation margins of up to 0.30 or 0.40 percentage points for customers using offers from several banks », observes Cécile Roquelaure.
A fall that will run out of steam
After several months of efforts to attract new customers, the banks’ room for maneuver is starting to run out anyway.
” In January, nine out of ten banks had lowered their interest rates, but today this momentum is slowing down a bit. “, analyzes the head of studies at Empruntis, who believes that ” in 3 months credits will not necessarily be better than today. »
An observation shared by most brokers.
” A 1% reduction in ECB rates would be necessary for credit rates to fall below 3% », explains Maël Bernier, who expects a stabilization of loan interest rates around 3.5% from this autumn.
The major reopening of the credit floodgates therefore does not seem to happen right away. The Logement Credit Observatory also estimates that credit production should remain around €150 billion in the first half of the year (ie the same level as in 2023) before experiencing double-digit growth in the wake of the second half of 2024 to reach €165 or €170 billion by the end of 2025. A figure still very far from the good years 2019 or 2021 with 200 billion.
(With AFP)
