Real estate credit: will banks close the door on 100,000 households?

Nearly 100,000 candidates for home ownership, especially modest households, could be excluded from the mortgage in 2020. The cause: the new constraints on the banks to tighten their lending policy.

2019, a historic year for real estate credit: last year, French banks opened up the tap for real estate credit. To meet the demand of eager households to take advantage of historically low rates, but also to gain market share: real estate credit, which generally engages you for 15, 20 years, or even 25 years, remains the most loyal banking product by far.

Result: almost a quarter of the French (23.6% precisely) are currently in the process of homeownership, a figure historically high, according to the 32nd edition from the Household Credit Observatory, published this week by the French Banking Federation. And almost 5% of households intend to imitate them in 2020.

 

The 33% rule exceeded in 20% of cases

real estate credit

The game, however, does not look easy for everyone. Last year, to meet the high demand, the banks agreed to loosen their granting criteria, that is to say the rules they apply to determine whether or not they grant a credit to a household. Among these criteria, that of the debt ratio of 33% to: an unspoken rule, which wants to avoid granting a household a loan that would increase its effort rate (i.e. the weight of credit repayment installments in its monthly budget) above 33%.

According to the economics professor at the origin of the Observatory, Marnie Coullart, cited by Lite Lending, this debt ratio was thus exceeded last year for around 20% of the 1, 33 million new borrowers. Or about 250,000 households.

 

The “France of yellow vests ” in the front line

credit loans

These generosity should however disappear in 2020. At the end of last year, the High Council of Financial Stability (HCSF) whistled at the end. This body, emanating from the Cream Bank and chaired by the Minister of the Economy, Ben Cruise, notably asked the banks to respect the 33% ratio more strictly. At the risk of being killed.

Result: according to Marnie Coullart, this tightening of the granting rules could lead to the exclusion of 8 to 12% of new borrowers. Or around 100,000 households, having in common that they have no room to maneuver to reduce their effort rate. Modest households, therefore, with less than two monthly minimum wage, living in rural areas and even medium-sized urban areas. “It is finally the France of yellow vests ”, concludes the economist.

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