The Banque de France has just published its latest statistics on the production of loans following the announcements of the National Council for Refoundation (CNR) on housing.
While the monthly review of usury rates has just been extended until the end of the year, this measure does not appear to have helped to increase the number of loans granted since its implementation in February.
Attrition rates are still increasing
Following a meeting held in January at the Banque de France with broker associations and the French Banking Federation (FBF), interest rates have now been revised monthly since 1eh February – and no longer every quarter – on the basis of the average of the rates applied by the banks in the previous three months.
The goal: to unlock access to credit. The interest rates are thresholds set by the Banque de France (depending on the duration of the loans) above which a banking institution cannot lend money.
The aim is to protect households by prohibiting the granting of loans at excessively high rates. But last year, during a period of rapid increases in credit interest rates, many loan applications were rejected because they exceeded the prevailing interest rates.
With the new audit status, the interest rate for loans over 20 years and above has increased from 3.57%, effective on 1eh quarter 2023 before its monthly payment, at 3.79% on 1eh February, 4% on 1eh March, 4.24% on 1eh April, 4.52% on 1eh May and 4.68% on 1eh June.
This means that banks can offer APR (annual costs in percentage) for the month of June, including loan interest, costs for the borrower’s insurance, administration fees, etc. with max. 4.68%.
This is helping to restore their margins, as the cost of buying the money they lend has risen sharply in recent months, encouraging them to lend.
Small effect since 1eh FEBRUARY
Has the monthly review reached its goal? Since July 2022, loan production has been in free fall. In May 2023, it was thus estimated by the Banque de France at 14.5 billion euros and even 12.2 billion excluding loan renegotiation.
A figure down slightly from April (15 billion euros in total) and among the lowest historical levels since 2017. Over a year, compared to May 2022, – the peak of 26.8 billion euros – loan production fell by 45.9%.
“In light of these figures, it is undeniable that the monthly review of the usurious rate has not had the expected effect, that is to lift the block on the granting of loans and further encourage banks to lend by allowing them to raise their credit rates. ”, analyzes Julie Bachet, director of Vousfinancer, loan broker, as the rise in interest rates has only slightly increased the production of credits.
“But we can believe that the situation would have been worse if the attrition rates had only been revised every three months…”, she admits.
A monthly payment for extended wear rates
Among the measures Prime Minister Élisabeth Borne has announced after the CNR on housing is the extension of the monthly payment of wear rates until the end of 2023, when it was due to expire in July.
“This is good news, because if the rise in interest rates slowed down in May, it is not over and seems to have regained strength in June,” emphasizes Cécile Roquelaure, director of studies at loan broker Borrow. We still have to wait to unlock access to credit, which is a major obstacle to the market. »
Same observation for Julie Bachet from Vousfinancer: “On the financing side, there are currently few solutions to the problem of the lack of bank offer. The continuation of the monthly revision of the attrition rate is all the same good news, which will make it possible to avoid another greater blocking of credits, but that will not be enough. We must again stimulate the banks to lend.”
Towards an improvement in conditions after June 13?
The High Council for Financial Stability (HCSF), led by Economy Minister Bruno Le Maire, could announce an easing of its recommendations at the end of its meeting on June 13 to further encourage banks to lend.
The conditions attached to the flexibility available to them could be relaxed.
In fact, for 20% of their loan production, the banks cannot comply with the household debt criteria (maximum 35%) and maximum loan period (25 years) imposed by the HCSF, under certain conditions: 80% of this margin must be allocated to finance the purchase of main residences.
The profiles to which these exemptions are granted could thus be left to the banks’ free assessment of risk.
For Julie Bachet, “no miracle happens” on June 13: “The banks currently do not even fully use their flexibility margin – only at 14.6% instead of 20% – and even set their own criteria for granting loans at to limit the risk as much as possible given the low profitability of credit activity at the moment. Let’s hope that those with credit rates of more than 4% are back in the market to finance the French, whose attraction to real estate is undeniable, and for whom housing is a need! »
