Should we see this as a sign of a new trend? For the first time since the start of 2022, the average interest rate, excluding fees and insurance, on new home loans (excluding renegotiations) fell by 6 basis points, falling to 4.11% in February compared to 4 .17% in January 2024, reports the Banque de France this Monday, April 8.
The amount of new housing loans, excluding renegotiations, fell slightly in February, to 7.3 billion euros excluding renegotiations, compared to 7.6 billion euros during the previous month. The amount has been divided by three since the peak in spring 2022, to more than 22 billion euros. A direct consequence of the monetary policy of the European Central Bank, according to The echoes, which tightened from spring 2022 to fight inflation. This policy resulted in a spectacular fall in the production of real estate credit: in 2021, a record year, banks still lent (excluding renegotiations) 244 billion euros, then 235 billion in 2022. In 2023, with a decline of 40%, the banks will have granted only 139 billion euros in loans. But by making their borrowing conditions more attractive, banks hope to turn this austere page.
Relaunch the real estate market
According to the National Real Estate Federation (Fnaim), sales actually fell by 22% in 2023. And the amount of new real estate loans granted fell last year to a historic low point since 2015, according to data from the Banque de France while the trend observed over recent months is still downward.
To “restore real estate purchasing power to the French”, the Minister of Ecological Transition Christophe Béchu announced on January 31 during his wishes that he wanted to “appraise new financial tools”. To do this, the minister proposed relaunching loans repayable at maturity, which dissociate the payment of interest as well as the repayment of capital. Two types of loans that are rarely marketed today by banking establishments in France. The Banque de France is instead counting on the stabilization or even fall of real estate prices. However, this lever is not in their hands and the decline exists but is not sufficient to completely revive the market.
But the legislator has not said his last word. In an attempt to obtain a relaxation of the rules for granting credit, set by the High Financial Stability Council (HCSF), a bill will be examined on Wednesday in committee at the National Assembly. In particular, it plans to allow banks to further deviate from one of its flagship rules, the limit on borrowers’ effort rate to 35% of their income.