The volume of loans granted by banks fell by -19.5% in March, according to figures published by the Banque de France. Real estate professionals already know that the equation for 2020 will be a tricky one.
Slowdown in lending in March
Banque de France figures show that the amount of new home loans fell to 20.2 billion euros in March 2020 from 25.1 billion euros in February. The proportion of renegotiations remained high (29.3% in February, 28% in March).
This drop can be explained by, but is not limited to, the implementation of the Covid-19 pandemic containment measures. In fact, despite the confinement, property loans requested in February were granted in March. The Banque de France points out that "new loan production represents loans granted, even when they have not yet actually been paid out to the employer". According to several brokers, this slowdown has more to do with the restrictions imposed by the authorities in December 2019 than with the Covid-19 crisis, the effects of which will be felt in April or May.
Rising lending rates and financing refusals
The average mortgage rate rose slightly to 1.20%, compared with 1.19% in February and 1.17% in January. Banks are now more selective, anticipating a worsening economic situation in the months ahead. They are asking brokers to be more vigilant about borrowers' professional situation, their sector of activity, their level of indebtedness, the proportion of their downpayment to the value of the property, and the value of their savings.
But brokers' main concern is the level of usury rates, above which institutions are forbidden to lend money. These rates have fallen again, automatically excluding certain borrowers. Several banks, for example, are offering rates of around 2% over 25 years (excluding insurance), whereas the usury rate for this term is set at 2.51%. Among industry professionals, Cafpi has observed a sharp rise in refusals to finance, and is calling for a reform of the rules for calculating the usury rate, as those currently in force exclude creditworthy borrowers from home ownership. Economist Michel Mouillart estimates that " almost 200,000 households could be excluded by 2021 as a result of the health crisis and the credit crunch ".
It remains to be seen whether the second half of the year will see an upturn in the market, despite tighter credit conditions, fears of contamination, travel restrictions and public and private operators operating at a slower pace.