According to Crédit Logement, the mortgage specialist, and the Crésus network of associations, a wave of mortgage defaults is likely in 2021. Nevertheless, banks are reassuring us by adapting their lending practices.
Nearly half of all households are in debt
Low interest rates have encouraged households to take out one or more mortgages and/or consumer loans. As a result, almost one in two households is now in debt. For the time being, there has been no real increase in overdue debts. The number of overindebtedness cases filed since January 1, 2020 is even down on 2019.
Despite the reassuring figures, industry players fear the impact of the 2nd wave of the epidemic on household debt. At the same time, the unemployment rate jumped 9% in the 3rd quarter.
The Crésus network of associations recommends that borrowers facing financial difficulties act quickly, and not wait until they have filed for overindebtedness. Possible solutions include the " délai de grâce" (grace period) procedure, which allows borrowers to apply to a judge to suspend monthly credit payments for 2 years. The judge can also set out in his order the terms of payment of sums that may be demanded at the end of this period.
Lending: banks are increasingly demanding
The authorities, like the banks, fear an explosion in non-payments as early as 2021. To cope with rising indebtedness, they have tightened certain conditions. In September, the French High Council for Financial Stability (HCSF) brought together Bercy, the Treasury and the Banque de France to announce that it would be maintaining its cautious recommendations on mortgages until at least the end of the year.
As a reminder, in 2019, the HCSF had suggested that banks no longer grant mortgages with a term of more than 25 years, nor accept loan repayments by households exceeding one-third of their income. According to the authorities, there is no reason yet to relax these constraints, as "the market and production of home loans have recovered", on the one hand, and "rates on home loans remain close to their historic lows", on the other.
For their part, banks have already adapted their behavior by becoming more demanding in their analysis. A survey conducted by the European Central Bank (ECB) shows that criteria for granting loans to households have become particularly stringent in France, where banks are reporting lower risk tolerance.
It remains to be seen whether the expectations of industry players will be confirmed in the coming weeks, depending on how the pandemic develops in the country.