Real estate credit: “you are creating the conditions for a crisis that could be very serious”

Real estate credit: "you are creating the conditions for a crisis that could be very serious"

The supervision of the indebtedness conditions and the low level of the usury rate block more and more mortgage files.

With interest rates rising rapidly, getting a mortgage is becoming more difficult, say brokers and developers, who are concerned about the longer-term consequences of these difficulties. Main obstacle according to the runners: the rate of attrition. Reviewed quarterly by the Banque de France, it sets the maximum rate at which banks can lend.

Currently, it stands at 2.57% for 20-year mortgages, all expenses included, including insurance and brokers’ commission. However, with banks themselves borrowing more expensively than at the beginning of the year, they may be tempted to kick out brokers to preserve their margins.

“The only people who will be able to borrow will be those under 45 years of age who are in good health and at the same time have income and personal contributions high enough to be interesting for banks. But it is a client in two, no more. “, fears Olivier Lendrevie, president of the Cafpi brokerage network.

“When, due to a problem with the configuration of a regulation, you leave one out of every two potential buyers out of the game, you unbalance the market and create the conditions for a crisis that can be very serious,” he warns.

Buyers in the best position could, in fact, better negotiate their purchases, in the absence of competitors, and cause real estate prices to fall.

The number of locked files skyrockets

According to a survey commissioned by broker associations (survey* Opinion System on behalf of 6 professional associations of intermediaries in banking transactions and payment services (IOBSP): CNCEF, Afib, Anacofi, Apic, CNCGP and La compagnie des CGP), the 40% of professionals surveyed believe that at least four out of ten applications have been denied since the beginning of the year. According to another survey, this time only for the French Association of Bancassurance Intermediaries (AFIB) and covering a more recent period, 45% of loan files no longer go through intermediaries.

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Other real estate and finance professionals are more cautious. “We still don’t have a feeling as strong as the brokers, but it will happen automatically,” Peggy Montesinos, a real estate specialist at the Superior Council of Notaries, testifies to AFP.

“Today, although rates are rising, they are still attractive and well below inflation. The truth is that the combination of the rate of wear and the rise in rates desolventizes part of the first-time buyers, especially the most modest and the youngest. “, judge with AFP Véronique Bédague, executive director of Nexity.

The banks “are attentive to the indicators that could testify to tensions on the mortgage. These indicators multiply over the days, as pointed out by the French who are looking for a loan to buy their house,” said the French Banking Federation (FBF). .

No displacement effect according to the Banque de France

“The banking profession is therefore sensitive to the usury device, this measure of protection for borrowers, not becoming a mechanism for excluding households from financing their solvent projects,” adds the professional organization.

The Banque de France, on the other hand, clearly stands out from the brokers’ finds. The institution recalls that the usury rate is made “to protect borrowing households, and not the interests of intermediaries or lenders.” A “possible crowding out” of debtors “didn’t exist significantly before the end of June; we’ll look precisely at the end of September,” he adds.

In a publication dated August 2, the central bank notes that the “housing loan production is beginning to gradually normalize” while remaining “above the monthly averages of recent years.”

It registered a year-on-year increase of 6.2% in the outstanding balance of loans to individuals in June, supported by the “housing” component (+6.6%). The new loans granted represented 22.7 billion euros in June, below May (26.8 billion) but “higher than the monthly averages observed for 5 years” that range between 16.9 and 22.8 billion, says the central bank. The fact is that the Banque de France observes here the credits actually released at the time of signing the notarial deed, which generally occurs 3 months after the promise of sale. Therefore, there is a change in the data to take into account.

The government promises to investigate the matter

In addition, the rise in interest rates on new loans continues “very gradually”: 1.26% on average in May, 1.35% on average in June and 1.44% expected in July, according to the central bank. However, this is the nominal rate, to which all the costs related to obtaining the credit are added, to obtain the global effective rate of the loan (APR), capped by law. And again, these are the rates that are taken into account when the loans are released and not the market rates currently offered by banks.

Economy Minister Bruno Le Maire promised to raise the issue “from the first days of the start of the school year” with the governor of the Banque de France.

*Survey conducted by Sistema de Opinion between July 8, 2022 and July 22, 2022 with 1,471 respondents.

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