Personal loans, consumer credit not allocated to a particular property, fell in the first quarter by 25.3% over a year, announced Monday the French Association of Financial Companies (ASF). In volume, the amount increased from €3.56 billion between January and March 2022 to €2.66 billion over the same period this year. In the dock, "the too slow increase in the rate of usury compared to refinancing costs," says the association, which makes the granting of this type of loans less profitable for banks. The rise in interest rates by central banks, including the European Central Bank (ECB), has led to an increase in the cost of money for credit institutions, which they have not been able to pass on entirely to their customers because of the usury rate, a ceiling rate intended to protect the borrower against over-indebtedness.
An "unfavourable" economic situation
With nearly 95 billion euros outstanding at the end of December, personal loans represent almost half of outstanding consumer credit, according to the Bank of France. Appropriations allocated to home improvement and household equipment remained stable over the quarter (+3.9%) and revolving credits benefited from favourable circumstances. (+11,1%). This volume of production, on the other hand, says nothing about the quality of borrowers.
Describing the current economic situation as "unfavourable", the ASF noted in a document published earlier this month that the quality of demand for consumer credit continued to erode with "first unpaid bills (which) increase slightly". Finally, financing of new and used cars "continues to be done primarily by leasing with option to purchase (LOA)", observes the ASF, with an increase of more than 10% in new financing over the quarter. All consumer loans combined, production was almost stable in the first quarter (-0.7%), for a total of 11.59 billion euros of new loans between January and March.
The French Association of Financial Companies brings together some 260 companies in furniture and real estate leasing, factoring, and other related services.
