Some changes in the rules governing real estate credit. The Ministry of the Economy and the Bank of France, brought together in the High Financial Stability Council (HCSF), announced this Monday December marginal adjustments in order to revive the real estate market.
The HCSF “decided to make three technical adjustments […]taking note of certain operational difficulties” noted in particular by the banks, he writes in a press release. The latter may in particular deviate from the maximum loan duration limit of 25 years, to go up to 27 years, if work represents 10% of the total amount of the operation.
The HCSF also decided “to authorize credit institutions to exclude the interest charge associated with bridging loans” in the calculation of the effort rate, that is to say the total amount of expenses linked to the housing compared to income, left at 35%. One obstacle, however: the amount of the bridging loan must not exceed 80% of the value of the property sold.
Finally, banks will have more flexibility to deploy their quota of exceptions to the rules for granting credit, maintained at 20%. They may occasionally exceed this limit over a quarter if they manage to maintain the 20% limit by counting the following two quarters.
“Further streamline relationships with borrowers”
The HCSF also declared itself in favor of a place agreement for a second level examination of refused credits, an idea launched by the governor of the Bank of France François Villeroy de Galhau on November 17 and recently taken up by Bruno Le Mayor.
The objective would be to “further streamline relations with borrowers, either by giving more explanations when a loan is refused, or possibly in the case where the borrower is solvent, to be able to carry out a re-examination under new conditions of granting credit”, according to a source close to the HCSF.
The application of this “transitional and temporary” system would take place at the beginning of February, according to the same source. It will be done on a case-by-case basis, at the request of the candidate for the loan.
The lowest level in more than 7 years
The objective of the HCSF is to restart the production of real estate loans, which has fallen below 10 billion euros per month since August, according to the Banque de France. This is the lowest level observed in more than 7 years.
The rules for granting real estate loans, in particular their duration and their weight in relation to the income of borrowers, are reviewed every quarter by the High Council, a body chaired by the Minister of the Economy and on which sits the governor of the Bank of France.