2020: Loan Terms Begin to Decrease
After a year 2019 that broke all records in terms of interest rates, rates are beginning to rise very slightly...
The state of mortgage credit, early 2020
After a year 2019 that broke all records in terms of interest rates (see our article on the subject), rates are beginning to rise very slightly: an increase of 0.01% in January 2020 compared to November 2019. However, these rates remain historically low.
Added to this, the average loan term has never been longer, with an average term of 232 months (19.33 years) in December 2019. The French have never borrowed over such long periods (Read an article by BFM on the subject).
These conditions thus enabled yet another record to be broken in 2019: total borrowing amounts reached €1.017 billion! However, these volumes are beginning to worry authorities…
Concerns from the Banque de France
Indeed, the Banque de France has asked banks, following the release of these figures, to avoid granting loans with a term exceeding 25 years. Another instruction has been added: banks should also not grant mortgage credit where repayment exceeds one-third of the borrower’s income.
Thus, following instructions from the Banque de France and the HCSF (High Council for Financial Stability), the average term of loans taken out in January fell to 227 months (just under 19 years). This decrease of 5 months is quite unusual.
However, this is in no way worrying as rates remain very low. The year 2020 should follow on from 2019, but with generally shorter loans.
