“The borrower can maintain the conditions of the loan granted in the event of sale of the real estate for the purchase of third-party real estate.” This is the unique article of the bill tabled by the deputy Renaissance of Seine-Maritime, Damien Adam, aiming to “generalize the portability clause to real estate loan offers” – today optional. If this text were adopted, the debtor would therefore have the obligation to allow his borrower to use the portability of the real estate loan if he so wishes. This bill should not be debated before September, specifies BFMTV.
Portability allows owners who wish to acquire a new property to continue to use the credit taken out when purchasing their current property, rather than having to first repay their initial loan and then take out a new one. In other words, the owner transferring a property maintains the same financing contract with the bank with a view to immediately purchasing another. Transferability consists, for its part, of attaching the loan not to the borrower, but to the property itself.
Substantial savings at stake
Most of the time, when an owner sells his property to buy another, he uses the proceeds from the sale of his first home to prepay the associated loan, then he takes out a new loan for the new property. Traditionally, the borrower therefore renounces his old borrowing conditions and must adapt to the new ones. If the interest rate on the first loan taken out is lower than the current rate at the time of the new purchase, the owner will necessarily benefit, otherwise, it would be enough not to exercise this option.
If Damien Adam’s bill were adopted, the borrower could therefore continue to benefit from a more advantageous rate than that currently offered by banks. This measure could thus allow certain owners to save several tens of thousands of euros, particularly those who took out a property loan between 2017 and 2021, at a time when rates varied around 1% to 1.5%.
As BFMTV indicates, portability could have several advantages, while the real estate market is sluggish. And in particular convince many owners to put housing back on the market, which they are keeping today in order not to lose their borrowing conditions at very low rates. Portability could therefore bring more offers to the market, and more fluidity.
Portability already exists, but it requires a specific clause in the loan contract. However, with the decline in credit rates observed between 2016 and 2021, many banks have stopped including this option, fearing that low-yielding credits could cause them losses if rates rise. “From the moment we had very low-paying loans, the banks stopped putting clauses in the loans. And then, in the event of a rise in rates, these loans cost them money.” explains to Europe 1 Caroline Arnould, from the Cafpi broker.
A potential harmful effect
The National Real Estate Federation (Fnaim) has been defending the transferability and portability of loans for several months, a “simple and common sense measure to allow the French to reconnect with property”, in order to counter the “sclerosis” of the market . Buyers are weighed down by rates which have quadrupled in two and a half years and prices which are not falling enough to compensate for this increase.
After seeing loan production drop by 34.7% between 2022 and 2023, according to the Banque de France, the issuance of real estate loans reached its lowest rate in 10 years, with 7.6 billion euros in loans to housing disbursed by the banks in January 2024. Faced with this observation, the number of real estate sales fell by 22% over the whole of 2023. The credit market is still regaining some color this spring with the drop in rates observed in recent months. According to the Crédit Logement CSA observatory, last April, the number of loans was up by almost 70% compared to last December.
If MP Damien Adam’s bill were adopted, banks, which bear costs linked to the acquisition of capital, could however be forced to increase their rates in order to maintain their profit margins, remember Capital. “The banks buy the money, it has a cost. They are not intended to sell credits at a loss where they have had, in recent years, significant margins”, indicates Caroline Arnould to Europe 1.