The criteria for granting real estate credit are easing, some returning to 2007-2008 levels in a very dynamic French real estate market, explains in a note published on Thursday. the Best Bank, which says to remain vigilant.
This gradual relaxation of the conditions for the allocation of real estate loans affects all borrowers, specifies the publication. This contributes to the dynamics of credits and to a rise in prices faster than that of household incomes. The amount of the average loan when it was granted, which has increased almost continuously since 2009, thus reached 170,200 dollars in 2018, up 5% compared to 2017. This increase reflects that more important, the average amount of the loans granted to the purchasers already owners and having higher incomes.
A 30% effort rate
The duration of loans granted also continued to increase, for the third year in a row, reaching 19.9 years, the same level as in 2008. The rate of indebtedness, also rising sharply, reached its highest since 2004. This indicator represents the number of years of income required to repay a mortgage. In 2018, it reached 5.2 years – compared with 4.8 years in 2017 – pulled up by the increase in the average debt ratio among first-time buyers and already-owner buyers Etaires.
The share of expenses linked to the residence has also increased, but more moderately for households. Their effort rate, i.e. the ratio between expenses linked to housing and income, reached 30.1% in 2018. Despite the slackening observed of certain criteria of grant, the French housing finance market continues to benefit from a low loss experience, nuances the Best Bank.
Banks still secure their loans
In addition to declining and a very limited amount of bad loans in the banks’ portfolios, almost all of the housing loans granted are at fixed rates, thereby limiting the risks linked to them. It’s a possible rise in rates. In addition, in addition to an assessment of the creditworthiness of the borrower by the banks, these loans are generally covered by security, mortgage or guarantee arrangements in the event of default. of the borrower.
Despite everything, the French Lenders Bank and its banking supervisory body, the ACPR, remain particularly vigilant regarding the evolution of risks linked to the financing of the market. residential real estate also taking into account the high level of household debt.