Preserving the financial stability of households
Since January 1, individuals can no longer borrow for more than 25 years to acquire real estate. And their debt ratio can no longer exceed 35% of income.
In fact, this recommendation issued in 2019 by the High Council for Financial Stability was more or less applied by the banks. But this time this instruction is obligatory, registered in the Official Journal of January 1st. It must be said that for 20 years, the household debt ratio had exploded, with historically low credit rates.
Exceptions to the dropper
A few exceptions will still exist: entry into possession of the property delayed in relation to the granting of the credit (with a maximum duration of 27 years), new housing under construction or even purchase of an old property with work representing 25% of the total cost of the operation. The text also provides that certain financial institutions may derogate from the rule, but in a limited part of new loans.
Household debt on the rise
In addition, the debt ratio of borrowers may not exceed 35% of annual income. “A usual market practice is to limit it to 33% at the time of granting”, according to the HCSF.
In its decision of September 21, 2021, the High Council for Financial Stability recalls that “household debt rose from 53.4% of gross disposable income to 100.9% between the first quarter of 2001 and the first quarter of 2021”. In this context, the objective is therefore to promote a “prudent granting of housing loans”, in order not to weaken the financial capacities of households.