The recovery of real estate credit is accelerating in France

The rebound in real estate credit, which began in the spring, has clearly increased in July, benefiting from the easing of monetary policies, according to figures published by the Banque de France on Friday, September 6.

New housing loans, all durations combined and excluding loan renegotiations, reached 11.3 billion euros in July, their highest level since May 2023. Compared to the low point reached in March at 6.9 billion euros, the rebound thus reached 64%.

Certainly, the sharp decline observed since mid-2022, a consequence of the rapid rise in interest rates orchestrated by the European Central Bank (ECB) in an attempt to curb inflation, is far from being erased. Before this rapid decline, the monthly production of new housing loans had peaked at more than 22 billion euros in May 2022.

The fact remains that the quarter-point drop in the ECB’s key rates decided in June, widely anticipated by the financial markets, had a notable impact, even if it was not the only cause of the rebound. “Three elements are combined to promote the recovery of the market: a significant drop in interest rates, a drop in property prices and, even if it is not felt by all households, a recovery in purchasing power, thanks to the slowdown in inflation and the increase in wages.”explains Marie-Laure Barut-Etherington, deputy general director of the Banque de France.

A downward movement that should continue

The average interest rate on new loans (excluding fees and insurance) returned to 3.64% in July according to the Banque de France, a drop of more than half a percentage point compared to the January peak of 4.17%. And this trend is expected to continue: the Crédit Logement/CSA Observatory, in its latest edition published on Thursday, September 5, which is based on different data, reports an average rate of 3.65% in August and predicts a new phase of decline.

Enough to fuel the optimism of credit brokers, most of whom have suffered over the last two years from the fall in transaction volumes. Several of them welcome the renewed commercial dynamism of the major French banks, a change in attitude linked to the gradual reconstitution of their margins.

However, no one imagines a return to the peaks of 2015-2022 in the short or medium term, mainly because rates are expected to remain above their near-zero levels of that period, but also because the uncertain political context in France continues to slow down rental investment, a market segment sensitive to concerns about taxation. In July, first-time buyers represented half of new housing loans, compared to just over 40% three years ago.