The improvement expected for several months in the real estate sector has arrived. A drop in mortgage rates was recorded by brokers in January, across all maturities. Thus, as of January 23, the rates negotiated by the real estate loan broker CAFPI for its clients in January reached 3.63% over 10 years, 3.95% over 15 years, 4.10% over 20 years and 4 .27% over 25 years, i.e. decreases of between 20 and 32 hundredths compared to the previous month.
This decline “should continue in the coming months” to the extent that the European Central Bank (ECB) decided, on January 25, to once again maintain its main key rate at 4%, estimates CAFPI. However, the situation should still be complicated for a good number of households hit by the rise in rates and the difficulties in accessing property credit over the past year and a half.
Aware of these difficulties, the government hopes to revive the real estate market, which is in free fall. At 129.5 billion euros, the amount of new real estate loans granted fell in 2023 to a low point since 2015, according to data from the Banque de France. According to the National Real Estate Federation (Fnaim), sales have also fallen by 22% in 2023. Several avenues are mentioned by the executive and professionals in the sector in order to revive this sector in difficulty.
The ultimately repayable loan
The Minister of Ecological Transition Christophe Béchu, who will meet with French banks at the end of February for this purpose, wishes to relaunch the ultimately repayable loan. Very little marketed today by banking establishments in France, this type of credit, which is not new, dissociates the payment of interest and the repayment of capital. In practice, the borrower pays the interest on the loan (and insurance) each month but only repays the capital once, when the loan matures.
“To ultimately qualify for credit, the borrower must prove that he is very financially solid. The bank verifies that he has invested funds, and can even ensure that he makes monthly payments on a loan contract. life insurance, for example”, warns Maël Bernier, spokesperson for the online mail Meilleurtaux from RMC.
This type of loan can present certain tax advantages for rental investors. On the other hand, it presents a risk if the borrower counts on the resale of the property to repay the loan, the price of which may fall over time. The governor of the Bank of France, François Villeroy de Galhau, called on Wednesday for “caution” regarding this type of loan. These loans are “more risky since they extend the duration of household debt; they are therefore generally more expensive, and banks generally require more guarantees”, warned François Villeroy de Galhau in a message on LinkedIn.
In a statement sent to AFP on Monday, the French Banking Federation (FBF) also expressed some reservations about this type of credit. “A credit in fine is by construction more expensive in interest than a depreciable credit,” she emphasizes. “In France, bullet loans can sometimes be appropriate in certain property or rental investment transactions and very rarely in property ownership,” estimates the FBF.
The mortgage loan
In addition to ultimate credit, highlighted several times in recent days by Christophe Béchu, another system was mentioned by the minister: mortgage credit. With this type of loan, the bank asks the applicant for the loan to pledge real estate in order to provide additional security.
Concretely, the bank lends the buyer a sum of money representing 70% to 80% of the amount of the new property they wish to acquire, to be repaid like a traditional loan. The buyer repays the remaining 20% to 30% at the end of the credit. “This type of borrowing is widespread in Anglo-Saxon countries,” explains near Capital Cécile Roquelaure, director of studies at the broker Empruntis.
Portability and transferability of loans
Other proposals are mentioned, this time by real estate professionals, such as the reactivation of portability and transferability of loans. With the portability of loans, in order to finance his new acquisition, an owner could keep the loan he took out for the property he wishes to resell. Transferability, for its part, consists of attaching the loan, not to the borrower, but to the property itself. This will allow the transfer of the loan initially granted to the former owner for the benefit of the new buyer.
For Fnaim, these two “common sense proposals, strong, very concrete and simple to implement” are likely to “allow the French to reconnect with property”. “These are the only measures truly capable of unblocking the credit market and allowing the French to carry out their real estate projects without additional debt and without additional costs for public finances,” declared the president of Fnaim, Loïc Cantin, in a press release published Tuesday. Fnaim, on the other hand, is opposed to the government’s proposal to develop bullet or mortgage loans, systems which, according to it, do not “respond to the challenges of the real estate market”.
A second chance for refused credits
French banks, strongly encouraged in this direction by the Banque de France and Bercy, will already set up a system for “reviewing” refused real estate loan applications, as their professional federation announced on January 31. . “The objective is for customers to understand the reasons for their bank’s decision and, if the conditions are met, to benefit from a re-examination of their credit file,” explained Nicolas Namias, president of the Banking Federation, in a press release. French (FBF), also Chairman of the Management Board of BPCE.
This second examination of ungranted real estate loans will be carried out at the request of customers. It will concern both primary and secondary residence financing and rental investment files. This system will be implemented by banks gradually during the month of February and will apply until the end of this year, the FBF specified. However, loan applicants registered in the payment incident files managed by the Banque de France (FICP, FCC) will be excluded.