The Plan d'Epargne Logement is one of France's most popular investments. Nearly one saver in 5 holds one, according to the latest data published at the end of 2019. Against a backdrop of low interest rates and a health crisis, the Banque de France (BDF) considers that old PELs (from before 2011), with an average interest rate of 4.44%, are "weighing on the financing of the economy", and is considering lowering their interest rate to 1%.
Pre-2011 Plans d'Epargne Logement deemed too lucrative
In its report on regulated savings published on October 27, 2020, the Banque de France denounces the excessively high cost of "old" PELs, i.e. those taken out before the 2011 reform. Of these, 3.7 million have an average interest rate of 4.44%, weighted by the amount outstanding. More precisely, for a plan taken out in 2002, the interest rate climbs to 4.50%. The rate is even 7.50% for PELs held since 1986.
"This high remuneration, compared with current interest rates, weighs on the French economy, increasing the cost of resources available to banks for financing the economy", says the BDF.
Indeed, these rates stand in stark contrast to the current PEL interest rate of 1%. So it's hardly surprising that savers are holding on to their old PELs. Those contracted before 2011 are being closed fewer times than those opened after the reform. Other figures confirm this attachment to old PELs: plans open for 10 years or more represent 90.5 billion euros, or more than a third of total outstandings, which reached 282.5 billion euros at the end of 2019.
PEL: interest rate lowered to 1%.
The solution proposed by the Banque de France is to lower the interest rate on all PELs taken out before 2011 to 1%, i.e. to the rate currently in force for PELs opened since 2016.
"The gain in terms of resources financing the economy would be in the region of 4 billion euros," she adds.
According to François Mouriaux, Director of Monetary and Financial Statistics at the BDF, this is "a specific area of concern", and it's up to the legislator "to make a decision". For the moment, however, the subject is not on the table at Bercy or the French National Assembly. The members of the parliamentary information mission on savings in an environment of low interest rates have no plans to modify the interest rates or the lifespan of old PELs.
While such a reform seems tricky, as PEL rates are contractually defined when they are opened, the government can act on new PELs. In fact, this is what has been done in the past. Since 2018, open PELs have been taxed from the first year.