Posted Feb 5 2020 at 12:16 p.m.Updated Feb 5. 2020 at 3:57 p.m.
It’s almost as if nothing has happened. Authorities have been talking to banks for months
and published a series of recommendations
to avoid any runaway mortgage, the machine is still running. And even at full speed.
Borrowing rates broke a new record in December, according to the latest figures from the Banque de France. They reached 1.17%, a new historic low. They were still 1.20% in November, and 1.34% six months ago.
The Banque de France figures serve as a benchmark in the sector. They are the ones who compile all the new housing loans, covering 100% of the market. For other organizations, such as the Housing Credit Observatory / CSA (which tracks around 40% of cases), rates have already fallen to 1.13% in December; ditto for January.
Record production
As a direct result of low rates, outstandings are also evolving at unprecedented levels. 2019 was therefore a particularly dynamic year, with 258 billion euros in credit production, the second strongest year in history after 2017 (273 billion euros), according to the Banque de France.
In December, the net outstanding amount of loans increased by 7 billion euros, thus also reaching a new record at over 1.078 billion euros. Since 2010, the outstanding amount has increased by 63%, by more than 400 billion euros. “We are in a dynamic that is far too important”, explains a source close to the Banque de France.
Worried about this situation, the authorities rightly asked
repeatedly to banks to reduce the sail.
After months of consultation, the Haut Conseil de Stabilité Financière (HCSF), which brings together the Banque de France and the Treasury, has even published
in December recommendations.
The High Council recommended to the banks to respect the “rate of effort of 33%”. The idea is that the weight of a loan does not represent more than a third of the income of a borrowing household. The authorities have also asked the banks to respect a credit term which does not exceed 25 years.
Discrete on the subject for months, the banks came out of their silence at the end of January. And started the showdown. Via the Household Credit Observatory, an organization close to the French Banking Federation (FBF), they indicated that such a policy could bring out
100,000 mortgage loan households.
Monday, the Banque de France
has stepped up
explaining that the authorities did not want to limit the production of credit. “Access to mortgage will be maintained, without the slightest doubt”, said the institution in a joint statement with the ACPR, the bank gendarme. “It will continue to grow in France, on a healthier and more sustainable basis. “
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