Banks turn the tap back on

Good news for borrowers: with the drop in interest rates, credit production will start to rise again.

After a year 2023 and the beginning of 2024 marked by a historic decline in credit (the production of real estate loans had been almost halved), the trend should quickly reverse. This is what the Banque de France anticipates, which regularly questions other banks regarding the distribution of credit.

If financial institutions are reopening the loan tap, it is thanks to the drop in interest rates. Average rates, all durations combined, fell back to 3.62% in July, according to the latest Crédit Logement/CSA barometer, after reaching a peak of 4.24% at the end of last year. This is therefore good news for borrowers.

The improvement is explained by the breath of fresh air given by the European Central Bank (ECB) last June: after months of fighting inflation, the institution agreed to lower its rates and French banks followed suit. Add to that the very significant need for housing for the start of the school year, with, for example, the search for student housing or professional transfers etc., unlike winter and summer which are traditionally quieter periods, and you get an increase in the number of loans distributed.

An improvement that could last because there are several reasons to be optimistic. As inflation is easing, central banks should continue to lower their rates in Europe but also in the United States. Last Friday, the chairman of the Federal Reserve (Fed), Jerome Powell, declared that the time had come for the American central bank to ease its policy and reduce its interest rates.

Of course, the outlook is not entirely clear. There are still concerns about political instability, the budgetary situation, and the international context. But bankers note that it is mainly companies that are slowing down their investments and therefore their requests for credit. On the individual side, demand remains very strong.

One downside, however: the recovery is not benefiting everyone. It is mainly the most reassuring profiles, those who are on permanent contracts, with savings, who are seeing the doors of credit open. And then, as for real estate prices, do not count too much on a drop. Depending on the region, they remain generally quite high. Owners selling are having difficulty revising their claims.