According to the latest figures published by the Association française des Sociétés Financières (ASF), consumer credit production in 2020 saw its sharpest decline since the 2009 financial crisis.
A sharp drop in consumer credit production
In 2020, consumer credit fell by 11.5%, recording its sharpest decline since 2009, when it fell by 13.3%. Production totaled 40.2 billion euros, 10.7% below the all-time record set in September 2008.
This fall once again pushes consumer credit production further away from the level it had reached before the financial crisis, whereas it had come very close in February 2020, just before the start of the health crisis.
After collapsing in the spring, with a 35.4% drop, production rose again by 2.9% over the summer, before falling again in the fourth quarter, by 7.6%, due to the curfew and second lockdown.
Personal loans and revolving credit also fell. Over the full year 2020, personal loans fell by 18. 5% to 11.2 billion euros, the lowest level recorded since 2009.
Revolving credit fell by 15.5%, more than in 2009 (-11.2%). Revolving credit is now at its lowest level for 26 years.
Car financing was also down, as the French were more interested in equipping and improving their homes due to the many weeks of confinement.
Thus, while car financing fell by 10.3% for new passenger cars and 7.3% for used cars, financing for home improvements and household goods rose by 7.3% in the fourth quarter, with a limited decline of 2.8% for the year as a whole.
Consumer credit: a sharp decline despite positive household sentiment
The annual report of the 33rd edition of the Observatoire des Crédits aux Ménages (OCM), produced by the French Banking Federation and the Association française des Sociétés Financières, confirms the impact of the health crisis on consumer credit holdings.
While the rate of home loan holdings remained high, at its highest since the early 2000s with 31.4% of households holding a home loan, the overall rate of consumer credit holdings reached its lowest level since 1989, at 24.9% in 2020.
This fall in the rate of credit holdings is explained in particular by the closure of many stores during the confinement of spring 2020, a significant proportion of consumer credit being taken out directly in store on the occasion of a purchase.
The distribution of these loans by banks and credit institutions has fallen less sharply, but other distribution channels such as friends and family, mutual insurance companies and pension funds have also seen a decline.
However, credit-holding households' feelings about their budgetary and financial situation improved in 2020. 88.7% consider their repayment costs to be bearable, although 32.2% still consider them to be high.
Intentions to take out new loans in 2021 are impacted by uncertainties linked to the health crisis.