The rise in interest rates in 2023 has slowed credit.
The granting of new real estate loans reached its lowest level in eight years last year, at 129.5 billion euros, the Bank of France indicated this Friday, February 2.
We have to go back to 2015, a year when interest rates were lower, to obtain a lower amount of housing loans granted to individual residents, at 120 billion euros.
The Banque de France, however, observed a slowdown in the average interest rate on these loans, which practically did not increase in December (4.04%, after 3.99% in November), and noted that
"those of certain of our European neighbors have already started a decline.
Despite this stagnation in rates, the production of home loans continued to decline in December to reach 8.2 billion euros over the month, the lowest since December 2014.
Banks' reluctance
The rise in interest rates and the reluctance of banks to grant new loans while wages are increasing little and real estate prices have fallen only slightly have contributed to the drop in demand.
The tide has turned on the real estate loan market, after prosperous months above 20 billion euros in monthly loan production, as in October 2020, May, June and July 2021 or even April and May 2022, driven by a catch-up effect after periods of confinement and by the desire of borrowers in 2022 to benefit from still attractive rates before the announced rise.
Households have since become less inclined to borrow, due to the increase in key rates carried out by the European Central Bank (ECB) since mid-2022, passed on by the banks.
While the average rate remained below 1.1% until March 2022, it has not fallen below 2.5% for a year.
The total outstanding amount of real estate loans, however, remains significant at nearly 1,300 billion euros, twice as much as fifteen years ago.
The French are on average in debt for 23 years when they buy their main residence, with first-time buyers - who represent half of borrowers - being in debt for seven months more, according to the Banque de France.